The unraveling of Nortel’s assets has continued, with the Canadian vendor agreeing to sell its controlling stake in LG-Nortel to Ericsson.
Ericsson yesterday entered into a share purchase agreement to acquire Nortel’s 50%+1 share stake in the LG-Nortel joint venture, which will re-named LG-Ericsson and continue to be based in Seoul.
Ericsson will pay $242 million in cash for the stake.
The joint venture, established in 2005, is aimed at the Korean market and is the second-largest local vendor behind Samsung Electronics.
It generated around $650 million in sales in 2009 and has 1,300 employees.
Speculation that Ericsson had its eye on Nortel’s joint venture emerged last year, in the wake of Ericsson pledging to invest 2 trillion won ($1.8 billion) over five years in South Korea during South Korean president Lee Myung-bak's state visit to Sweden in July 2009.
The Korea Times reported in January that the deal was expected to be inked by March 31, but it said this time scale hinged on Ericsson “taking care of relations” with Alcatel-Lucent, the new owner of Nortel’s UMTS unit.
Nortel, which filed for bankruptcy protection in Toronto in January 2009, completed the sale of its optical and carrier Ethernet assets to Ciena for $773.8 million in cash last month.