NOTE acquires Ericsson Connectivity Systems
Ericsson Anslutningssystem is a subsidiary of the Ericsson Group with extensive expertise in production technology. Its operations consist of production development, prototyping and the manufacture of small to medium-sized series for the telecoms and electronics industries. Following the acquisition, the company will continue to be a supplier to Ericsson and focus on regional customers in Norrland, in line with NOTE's proximity concept (Excellence Plants).
The deal in brief
NOTE AB acquires Ericsson Anslutningssystem AB in Skellefteå from Ericsson. The acquired company will change its name to NOTE Skellefteå AB and will continue to be run as a company in the NOTE group by current CEO Berndt Eriksson. Other personnel will also remain, with no change in the number of employees (approximately 100 people). In addition to the Ericsson group, Ericsson Anslutningssystem has a number of regional customers. The business will be taken over on 1 January 2005.
Terms of payment
The purchase price consists of a cash lump sum. Goodwill is not expected to arise. The transaction is mainly made with part of the proceeds received from the new share issue in the spring.
Impact on the NOTE group
The acquisition will generate an estimated sales increase in 2005 of some SEK 190 m. Ericsson Anslutningssystem currently has an operating margin of some 4 %. After an integration phase, mainly in the first quarter, operations are expected to contribute according to the NOTE group's financial margin targets. Integration costs are estimated at some SEK 2 m. The deal also includes a long-term supplier agreement with Ericsson, under which NOTE is appointed a preferred supplier. Apart from the Skellefteå unit, NOTE will offer production to Ericsson via its low-cost units (Industrial Plants) and its global units (ems-ALLIANCE).
NOTE will increase its marketing efforts in northern Sweden through NOTE Skellefteå. This is expected to lead to further sales growth from the end of 2005.
Comments on the report
"Ericsson Anslutningssystem is a well-managed business that fits well with our business model," says Erik Stenfors, President and CEO of NOTE. "We now have good coverage for product owners in northern Sweden as well, so this acquisition is an important piece of the puzzle for NOTE."
"We believe that Ericsson Connection Systems is better placed to strengthen its position in the long term by being incorporated into a group that has production technology and production as its main business," says Yngve Hässler of Ericsson's Network Technologies business unit. "At the same time, we see the deal as positive for continued close co-operation between Ericsson and NOTE Skellefteå."
"We look forward to being part of a group that has contract manufacturing as its core business," says Berndt Eriksson, President of Ericsson Connection Systems. "Now we will focus more on general sales of production and production expertise, which will also lead to a continuous raising of the competence level."
For further information, please contact:
Erik Stenfors, President and CEO, NOTE, tel. 0176-799 01 or 0709-50 80 70
Yngve Hässler, Business Unit Network Technologies, Ericsson, tel. 08-719 00 00
Berndt Eriksson, CEO, Ericsson Anslutningssystem AB, tel. 0910-84510
Invitation to the press conference
Time: Tuesday 28 December, 11:00
Location: Ericsson Anslutningssystem AB, Svedjevägen 12, Skellefteå
