Ericsson to replace Nortel in LG partnership

Almost a year after announcing it wanted out of its partnership with LG Electronics, Nortel Networks Corp. has found a buyer. Subject to Ontario court approval, LM Ericsson will replace its name in the LG-Nortel joint venture founded in 2005. The selling price is US$242 million.

“Today's announcement is a positive step forward in securing a sound future for the LG-Nortel business and its valued customers,” LG-Nortel chair and GM Paul House said in a news release Wednesday. “Credit is due to the employees of LG-Nortel who have built this joint venture into a world class, profitable business.”

Nortel's Canadian division, Nortel Networks Ltd., is the majority partner in the venture, owning 50 per cent plus one share. Because the shares are owned by the subsiduary, an auction isn't required as was for other corporate assets.

Combining technologies and products from the two companies, LG-Nortel offered a range of solutions for almost every market, from small companies to service providers, including IP office phones and carrier mobile WiMax equipment. LG-Nortel is a big supplier to South Korean wireless operators, leveraging Nortel's expertise in CDMA cellular base station technology. Before it filed for bankruptcy protection Nortel had been working on ways to move its CDMA customers to the next-generation LTE standard.

Ericsson is a logical fit for the LG joint venture because it bought Nortel's CDMA unit for US$1.13 billion in November, 2009. There are some 900 Canadians in that unit, but an Ericsson Canada spokesman said none of them work for LG-Nortel.

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