Ericsson buys up Redback for $2.1bn

The Swedish equipment manufacturer, Ericsson, will buy American firm, Redback Networks, for $2.1bn (£1.06bn) the companies said Tuesday.

The cash offer of $25 a share is an 18 percent premium to Redback’s closing price of $21.17 on Tuesday.

The move is sure to be interpreted as a defensive one: following last month’s Lucent, Alcatel deal, Ericsson needs to shore up its fixed line assets. The firm has moved in on fixed line players as convergence plays out across North America and European markets where triple play packages are becoming the norm.

Redback has a strong position in multi-service edge routing technology, providing Ericsson with a strong IP asset.

Carl-Henric Svanberg, president and CEO of 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.”