Ericsson agreed in December 2006 to buy Redback Networks for $25 per share, with Redback’s announcement valuing the deal at $2.1 billion. Ericsson completed the acquisition on January 25, 2007. The $2.1 billion headline is not the only reported figure: Ericsson’s 2006 annual report later put the aggregate price at approximately $1.9 billion, while an SEC filing valued shares bought in the initial tender period at approximately $1.8 billion.
Why did Ericsson buy Redback Networks?
Redback made multi-service edge-routing systems for broadband networks. Its equipment and software helped telecommunications carriers deliver broadband internet, telephone, television and mobile services over IP networks. Ericsson said the acquisition would combine Redback’s intelligent routing with Ericsson’s own IP Multimedia Subsystem (IMS), optical transport and broadband-access businesses to strengthen end-to-end IP offerings for fixed and mobile operators. Ericsson’s historical account describes that strategic fit.
Redback also brought an established carrier business. Ericsson’s 2006 annual report said Redback served more than 700 carrier customers in over 80 countries and had about 800 employees, including 500 research-and-development engineers. Ericsson also reported that fifteen of the world’s 20 largest telephone carriers used Redback technology. These are figures reported by Ericsson at the time, not independently audited market statistics. Ericsson’s 2006 annual report gives the company’s account of Redback’s scale.
Was the deal $2.1 billion or $1.9 billion?
Both figures appeared in company disclosures, but they describe the transaction differently. Redback’s December 19, 2006 announcement called the proposed acquisition a $2.1 billion deal, based on Ericsson’s offer of $25 per share. Ericsson’s 2006 annual report later described the aggregate price as approximately $1.9 billion. The SEC separately reported that shares acquired in the initial offer period were worth approximately $1.8 billion as of January 24, 2007. That last figure covers the initial tendered shares, not the full acquisition.
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| Figure | What it describes | Source |
|---|---|---|
| $2.1 billion | Headline value in Redback’s December 19, 2006 announcement of Ericsson’s $25-per-share offer. | Redback announcement filed with the SEC |
| Approximately $1.9 billion | Aggregate price stated in Ericsson’s 2006 annual report. | Ericsson, 2006 annual report |
| Approximately $1.8 billion | Value of shares purchased in the initial offering period, reported by the SEC on January 24, 2007. | SEC filing, January 24, 2007 |
The figures should not be treated as interchangeable or as competing estimates of one identically defined amount. The public announcement, annual-report aggregate and initial-offer share value refer to different disclosures and stages of the transaction.
When did Ericsson complete the acquisition?
The agreement was announced in December 2006, followed by a cash tender offer and merger. Redback’s December 19 announcement said closing was expected in early 2007. Ericsson’s historical account dates its declaration of the signed agreement to December 20; the merger documents were filed with the SEC on December 22.
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- December 19, 2006: Redback announced Ericsson’s $25-per-share offer and the $2.1 billion headline value.
- December 20, 2006: Ericsson’s historical account dates the signed-agreement announcement to this day.
- December 22, 2006: The merger documents were filed with the SEC.
- January 24, 2007: The SEC reported the approximate value of shares purchased in the initial tender period.
- January 25, 2007: Ericsson announced completion of the merger.
At completion, Ericsson had acquired more than 90% of Redback’s shares. Remaining shares were converted into the right to receive the same $25 cash consideration. Ericsson’s January 25, 2007 completion announcement confirms the closing and treatment of the remaining shares.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How was the acquisition structured, and what happened to Redback?
Ericsson used an indirect subsidiary, Maxwell Acquisition Corporation, to make the cash tender offer, followed by a merger into Redback. Under the merger terms, Redback survived as an indirect, wholly owned subsidiary of Ericsson. The SEC-filed merger agreement describes the structure and the $25-per-share cash consideration.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteRedback retained its management team and continued as an Ericsson subsidiary after closing, according to Ericsson’s historical account. The acquisition therefore added Redback’s routing business to Ericsson without immediately eliminating the subsidiary’s management identity.
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