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Ericsson in LG joint venture

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08:29 CEST+02:00
Swedish telecom giant Ericsson has bought a majority stake in Korean firm LG and Nortel's joint venture company LG-Nortel for $242 million and will now become LG-Ericsson.

The deal received the backing of market analysts on Wednesday.

David Halldén at HQ Bank is positive towards the deal, arguing that the purchase will give Ericsson access to new customers in South Korea.

"The North American acquisition was a stock example," Halldén said, referring to Ericsson's purchase of other Nortel operations in 2009.

"This could strengthen the relationships with certain operators further, in this case in the Korean market."

The price tag of $242 million for a company which turns over $650 million has also been deemed a success.

"That has to be considered cheap," Halldén said.

"The purchase will strengthen Ericsson's position in Korea as well as gaining access to new sales channels," the company writes in a statement on Wednesday.

The new firm LG-Ericsson will become one of the largest telecom actors in South Korea.

"Korea is one of the world's largest telecom markets, where consumers have a large demand for new services. Thanks to our cooperation with our new partner LG Electronics we strengthen our position and improve our opportunities regarding future technological shifts, such as LTE," Ericsson CEO Hans Vestberg writes in the company statement.

In 2009 LG-Nortel had 1,300 employees and turned over $650 million.

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