Ericsson to take a hit with power cable divestment

Swedish kit vendor Ericsson has agreed to divest its power cable operation to Danish cable manufacturer NKT Cables for SEK250m ($38.4m).

However, Ericsson believes the transaction will generate a net loss of approximately SEK100m and negatively impact the operating income of its Networks business unit in 3Q13.

Ericsson said that its power cable operation has the potential to realise greater leverage and scale within NKT Cables, where it will be a core business. The move sees 320 Ericsson staff, primarily based in Sweden, transferred to the Danish firm. NKT Cables will also take over one of Ericsson’s factories in Sweden.

The transaction is subject to relevant regulatory approvals and is expected to close during the beginning of the third quarter of 2013.