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Ericsson To Pay $2.1 Billion For Assets Of U.K.'s Marconi

LONDON — Ericsson has emerged the victor to acquire the majority of the assets of Marconi Corp. plc in a cash deal valued at £1.2 billion ($2.1 billion).

The Swedish group is buying Marconi’s optical transmission equipment and broadband access and fixed wireless access units, its softswitch technology and most of its data networking and associated services, mainly based in the U.S. Also included are non-U.K. service operations.

These activities represent about 75 percent of Marconi's revenues, which in the most recent full financial year (to March 31 2005) were £1.27 billion ($2.24 billion). Ericsson says the deal will add £1 billion ($1.77 billion) to its annual revenues, and that the acquisition will not impact its earnings in 2006 before adding to net income in 2007.

On Tuesday (Oct. 25) Ericsson CEO Carl-Henric Svanberg warned of “significant” job losses following the integration of the Marconi business. Marconi currently employs 6,500 people and the Swedish chief executive said cuts of between 15 and 20 per cent would be “unavoidable” to rationalise the business.

Marconi will retain its U.K. services business, which employs about 2000 and has a turnover of about £330 million ($584 million). It will be renamed Telent plc. and will be Ericsson’s preferred services partner in the U.K.

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