Telecommunications equipment maker Ericsson will buy data networking equipment vendor Redback Networks for $2.1 billion in cash, the companies said Tuesday.
Once complete, the transaction would give Ericsson Redback's expertise in data-routing technology that helps service providers deliver broadband, telephone, television and services over networks using standard Internet infrastructure, San Jose, California-based Redback and Sweden's Ericsson said.
Ericsson will pay $25 in cash per Redback share, representing an 18% premium to Redback's closing stock price of $21.17 on Nasdaq on Tuesday. The Swedish company said that the cash transaction would be internally funded and boosts its presence in the fast-growing market of next-generation IP, or Internet Protocol, networks.
Ericsson also said Redback would help telecommunications carriers lower costs and upgrade their networks. Redback will keep its current management team and will operate as a wholly owned subsidiary of Ericsson.
The companies said the proposed acquisition is subject to customary closing conditions and regulatory approvals, and is expected to close early in 2007.