Telecom equipment manufacturer LM Ericsson Telephone Co. (ERIC) said Wednesday that it has agreed with its supplier Elcoteq to acquire part of its manufacturing operations in Tallinn for EUR 30 million, as Ericsson intends to secure manufacturing capacity in Estonia.
Elcoteq supplies radio access products to Ericsson's 2G and 3G base-stations together with optical and transmission equipment. Ericsson said it outsourced its volume production more than ten years ago and the strategy still remains.
The company noted that the purchase price relates to inventory and some minor assets. The agreement includes transfer of about 1,200 employees and also the transfer of lease agreement concerning manufacturing premises.
Ericsson's deal is as a result of Elcoteq's restructuring plan and consolidation of its manufacturing in Europe. Ericsson expects to close the transaction during 2009.
ERIC closed Tuesday's regular trading at $9.23 on the Nasdaq.
For comments and feedback: editorial@rttnews.com