C26 Business Combinations
Acquisitions and divestments
Acquisitions
| AcQUISITIONS 2009–2011 | ||||||
| 2011 | 2010 | 2009 | ||||
| Cash | 1,162 | 3,789 | 9,633 | |||
| Total consideration | 1,162 | 3,789 | 9,633 | |||
| Acquisition-related costs | 77 | 1) | 67 | 1) | – | |
| Net asset acquired | ||||||
| Cash and cash equivalents | 7 | 570 | 5 | |||
| Property, plant and equipment | 259 | 205 | 297 | |||
| Intangible assets | 382 | 3,825 | 5,832 | |||
| Investments in associates | 120 | 138 | – | |||
| Other assets | 140 | 2,506 | 1,235 | |||
| Provision, including post-employment benefits | –23 | –390 | – | |||
| Other liabilities | –37 | –3,573 | –1,270 | |||
| Total identifiable net assets | 848 | 3,281 | 6,099 | |||
| Non-controlling interest | 54 | –748 | – | |||
| Goodwill | 260 | 1,256 | 3,534 | |||
| 1,162 | 3,789 | 9,633 | ||||
| 1) Acquisition-related costs are included in Selling and administrative expenses in the consolidated income statement. | ||||||
In 2011, Ericsson made acquisitions with a negative cash flow effect amounting to SEK 1,232 (3,286) million, primarily:
- GDNT: On December 1, 2010 the Company announced it acquired certain assets of the Guangdong Nortel Telecommunication Equipment Company Ltd (GDNT). The asset deal was completed on May 12. The acquisition reaffirms our strong commitment to the China market, enhancing the Company’s existing R&D, manufacturing and services capabilities in the region. Approximately 1,000 employees, including 550 R&D engineers, were integrated into the Company. The purchase price was RMB 357 million on a cash and debt free basis. Balances to facilitate the Purchase Price Allocation are preliminary.
- Nortel Multiservice Switch business (MSS): On September 25, 2010, the Company announced that it was entering an purchase agreement to acquire certain assets of Nortel’s MSS. The asset deal was completed on March 11, 2011. The purchase price was USD 53 million on a cash and debt free basis. The acquisition has given the Company access to a strong product portfolio and installed base in the data segment while ensuring the supply of the platform for the recently acquired CDMA and GSM units. Approximately 160 employees were transferred to the Company. Balances to facilitate the Purchase Price Allocation are preliminary.
The preliminary purchase price allocations related to acquired businesses disclosed in 2010 were finalized in 2011 with the following effects:
- Optimi: Decreased goodwill by SEK 184 million, increased intangible assets by SEK 249 million, decreased deferred tax assets with SEK 77 million and increased other assets by SEK 12 million.
- LG-Nortel: Increased goodwill by SEK 64 million, decreased intangible assets by SEK 109 million, decreased deferred tax liabilities by SEK 24 million and decreased non-controlling interest by SEK 21 million.
Divestments
| Divestments 2009–2011 | |||
| 2011 | 2010 | 2009 | |
| Cash | –28 | 454 | 1,239 |
| Net assets disposed of | |||
| Property, plant and equipment | 1 | 21 | 5 |
| Investments in associates | 10 | – | – |
| Other assets | 38 | 372 | 586 |
| Other liabilities | –224 | –183 | –38 |
| –175 | 210 | 553 | |
| Net gains from divestments | 158 | 357 | 780 |
| Less Cash and cash equivalents | –11 | –113 | –94 |
| Cash flow effect | –28 | 454 | 1,239 |
In 2011, the Company made divestments with a cash flow effect amounting to SEK –28 (454) million.
Divestments in 2010 mainly refer to Ericsson Federal Inc. (EFI) with a gain amounting to SEK 216 million and a positive cash flow effect of SEK 360 million. Divestments in 2009 refer mainly to TEMS with a gain amounting to SEK 777 million and a positive cash flow effect of SEK 926 million.
| Acquisitions 2009–2011 | |||
| Company | Description | Transaction date | |
| GDNT | An asset purchase agreement of certain assets with around 1,000 employees. Enhances the Company’s existing R&D, manufacturing and services capabilities in the China region. | May, 2011 | |
| Nortel Multiservice Switch business (MSS) | An asset purchase agreement to acquire certain assets of Nortel’s MSS. | Mar, 2011 | |
| Optimi | A US-Spanish telecommunications vendor providing products and services within the networks optimization and management sector with around 200 employees. | Dec, 2010 | |
| inCode | An asset purchase agreement of certain assets with around 45 employees. A premier professional services firm providing strategic business and consulting services. | Sep, 2010 | |
| LG-Nortel | Nortel’s majority shareholding (50% + 1 share) in LG-Nortel with around 1,300 employees. | Jun, 2010 | |
| Nortel GSM | An asset purchase agreement of the Carrier Networks division of Nortel relating to GSM business. | Mar, 2010 | |
| Pride | Italian consulting and systems integration company with around 1,000 employees. | Jan, 2010 | |
| Nortel | An asset purchase agreement of the Carrier networks division of Nortel relating to CDMA and LTE technology. | Nov, 2009 | |
| Elcoteq | Estonian electronics manufacturing service company with around 1,200 employees. | Jul, 2009 | |
| Bizitek | Turkish systems integrator of business support systems with around 116 employees. | May, 2009 | |
| DIVESTMENTS 2009–2011 | |||
| Company | Description | Transaction date | |
| EFI | Sale of Ericsson Federal Inc. (EFI). | Dec, 2010 | |
| TEMS | Tools for air interface monitoring and radio network planning. | Jun, 2009 | |
