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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →Ericsson announced in December 2006 that it would buy Redback Networks for $25 per share, publicizing the deal at $2.1 billion. The companies completed the acquisition on January 25, 2007. The price figures differ across disclosures: Ericsson’s 2006 annual report later recorded approximately $1.9 billion in aggregate consideration, while an SEC filing put shares bought in the initial offer period at approximately $1.8 billion.
Why Ericsson wanted Redback Networks
Redback made multi-service edge-routing equipment and software for broadband networks. Carriers could use its systems to deliver broadband internet, telephone, television and mobile services over IP infrastructure. Ericsson saw Redback’s intelligent routing as a complement to its own IP Multimedia Subsystem (IMS), optical transport and broadband-access products, strengthening its end-to-end network offering for fixed and mobile operators. Ericsson’s account of Redback Networks describes this strategic fit.
The acquisition brought Ericsson an established carrier business. Ericsson reported in 2006 that Redback had more than 700 carrier customers in over 80 countries and about 800 employees, including 500 research-and-development engineers. Ericsson also said fifteen of the world’s top 20 telephone carriers used Redback technology. These are historical figures reported by Ericsson, not independent market counts. Ericsson’s 2006 annual report provides those figures.
Was the deal worth $2.1 billion or $1.9 billion?
Both figures appear in company disclosures, but they describe the transaction differently. Redback’s December 19, 2006 announcement called the proposed acquisition a $2.1 billion deal at $25 per share. Ericsson’s 2006 annual report recorded the consideration as $25 per share, or approximately $1.9 billion in aggregate. A separate SEC filing said shares purchased during the initial tender-offer period were worth approximately $1.8 billion. Those source-specific amounts should not be treated as interchangeable final-price figures.
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| Figure | What it describes | Source |
|---|---|---|
| $2.1 billion | Headline value in Redback’s December 19, 2006 announcement of the proposed acquisition at $25 per share | Redback announcement |
| Approximately $1.9 billion | Aggregate consideration recorded by Ericsson for $25 per share in its 2006 annual report | Ericsson, 2006 annual report |
| Approximately $1.8 billion | Value of shares purchased during the initial offering period, as reported in an SEC filing dated January 24, 2007 | SEC filing |
When Ericsson announced and completed the acquisition
- December 19, 2006: Redback filed its announcement of Ericsson’s $25-per-share cash offer, publicized as a $2.1 billion deal. Redback’s announcement said closing was expected in early 2007.
- December 20, 2006: Ericsson’s historical account dates its declaration of the signed agreement to this day. Ericsson’s history page records the date.
- December 22, 2006: Tender-offer and merger documents were filed with the SEC. The merger terms provided for $25 in cash per share and for Redback to survive as an indirect wholly owned Ericsson subsidiary. The merger agreement sets out the structure.
- January 24, 2007: The SEC filing reported approximately $1.8 billion in shares purchased during the initial offer period. The filing describes those purchases.
- January 25, 2007: Ericsson announced completion of the merger. It had acquired more than 90% of Redback’s shares; untendered shares were converted into the right to receive the same $25 cash consideration. Ericsson’s closing announcement confirms completion.
How the tender offer and merger worked
Ericsson used its indirect subsidiary Maxwell Acquisition Corporation to make a cash tender offer for Redback shares, followed by a merger into Redback. Under the merger agreement, Redback survived as an indirect, wholly owned Ericsson subsidiary. At closing, Ericsson reported that it had acquired more than 90% of Redback’s shares; shares not tendered were converted into the same $25-per-share cash right. The offer price and the later treatment of remaining shares are set out in the SEC-filed merger agreement and Ericsson’s completion announcement.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What happened to Redback after the purchase?
Redback became a wholly owned Ericsson subsidiary, and its management team was retained, according to Ericsson’s historical account. The deal therefore added Redback’s routing technology and carrier relationships to Ericsson’s portfolio while preserving the acquired company’s subsidiary structure and management at the time.
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