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BANGALORE: Ericsson and Redback Networks, Inc. today announced that they have signed a definitive agreement under which Ericsson will acquire Redback for $25.00 per share, or an aggregate price of approximately $1.9 billion.
The offer represents a premium of 60 per cent to Redback's volume weighted average stock price.
Redback was founded 1996 in San Jose, CA, and listed on NASDAQ in 1998. It has over 700 carrier customers in more than 80 countries and employs about 800 people, including 500 R&D engineers. Fifteen of the top 20 telephone carriers worldwide use Redback's technology, including broadband routers to manage IP-based data, voice and video services.
The company grew sales 33 percent for full year 2005 and 87 percent for the first nine months of 2006 to $197 million.
Carl-Henric Svanberg, president and CEO, Ericsson, said: "The combined strengths of both companies will create significant value for customers and shareholders and exciting opportunities for employees. The pace of IP deployment is accelerating as operators move to all-IP converged networks, in which quality of service requires increasingly intelligent routers with higher capacity."
The ongoing and rapid build out of mobile and fixed broadband networks has led to the introduction of new IP-based services, such as VoIP, IPTV, and video-on-demand. These applications demand a very high quality of service and existing broadband networks lack the bandwidth and management tools to deliver these services in a reliable way.
Telecom grade performance is the essence of Ericsson's end-to-end offering, and with the growing importance of IP-based services it is key to have our own IP routing technology as a fundamental part of Ericsson's offering.
"The combination of Redback's intelligent routing technology and our leading IMS (IP Multimedia Subsystem), optical transport and broadband access puts Ericsson in a leading position with end-to-end IP solutions for both fixed and mobile operators," added Svanberg.
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