The transaction would give the companies expertise in data-routing technology that helps service providers deliver broadband, telephone, television and services over networks using standard Internet infrastructure, both companies said.

Ericsson will pay $25 in cash per Redback share, representing an 18 percent premium to Redback's closing stock price of $21.17 on Nasdaq on Tuesday. Ericsson 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.

Ericsson and Redback said they believe there is an opportunity to upgrade more than 2 billion wired and wireless users globally over the next 10 years to IP-based broadband networks and infrastructures.

The companies said the proposed acquisition is subject to customary closing conditions and regulatory approvals, and is expected to close early in 2007.

By: DocMemory
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