Ericsson has agreed to acquire Redback Networks, a maker of carrier edge routers, for $US2.1 billion.
Redback makes routers for delivering voice, video, data and mobility services at the outer edge of carrier networks. It would become a wholly owned subsidiary of Ericsson, the Swedish telecommunications giant, but would retain its management team, it said in a statement.
Carriers that once delivered simple digital subscriber line Internet access are now delving into VoIP, video and other services. As a greater variety of carrier services is delivered via IP networks, the devices closest to end-users who consume those services have a more complex job to do.
Founded in 1996, Redback has beaten some bigger rivals by focusing on multiservice router technology. After the acquisition, which was expected to close in early 2007, the company will accelerate its product development and gain global reach and financial resources, Redback said.
Redback's president and CEO, Kevin DeNuccio, will report to a management board led by Ericsson president and CEO, Carl-Henric Svanberg. Ericsson will make a tender offer for all outstanding shares of Redback stock at $US25 per share. Before the deal was announced on Tuesday, Redback (RBAK) shares on the Nasdaq had closed for the day at $US21.17.