Seoul: Sweden’s Ericsson, the world’s top network gear maker, agreed on Wednesday to buy a controlling stake in a telecom system venture between Nortel Networks and LG Electronics for $242 million.
Nortel, once North America’s biggest maker of telephone gear, filed for bankruptcy protection in January and was looking for a buyer for its 50% plus one share in LG-Nortel, a joint venture with South Korea’s LG Electronics Inc.
“This acquisition will significantly expand Ericsson’s footprint in the Korean market and provide Ericsson with a well established sales channel,” Ericsson said in a statement.
The venture, which includes contracts with major Korean telecom operators such as KT Corp and SK Telecom, will also enhance Ericsson’s position in growing long-term evolution (LTE) mobile technology, the statement said.
LG Electronics reiterated on Wednesday that it remained committed to maintaining its strategic investor status in LG-Nortel, which will be renamed LG-Ericsson.
Nortel said previously the venture, whch was set up in 2005 and reported $650 million in sales last year, was profitable and had not filed for creditor protection.
Goldman Sachs is advising Nortel on the sale.