Ericsson Buys Estonian Factory

Ericsson has signed an agreement with Elcoteq, a supplier to Ericsson, for part of its manufacturing operations in Estonia. The purchase price is EUR 30 million, relating to inventory and some minor assets. The agreement also includes transfer of about 1,200 employees. The revenue generated for Elcoteq by the transferred business is less than EUR 200 million annually.

Ericsson's decision is a result of Elcoteq's restructuring plan and consolidation of its manufacturing in Europe. Elcoteq is supplying radio access products to Ericsson's 2G and 3G base-stations together with optical- and transmission equipment.

Ericsson outsourced its volume production more than ten years ago - and said that this purchase does not change that overall strategy. Elcoteq has reduced its manufacturing capacity through a restructuring plan launched in January to adapt to the radical changes in the market situation. Ericsson noted that it made the purchase to secure its supplies from that facility.

The agreement includes transfer of the lease agreement concerning manufacturing premises. The transaction is expected to close during 2009 and requires formal approval by relevant anti-trust authorities.

Elcoteq will retain specialized manufacturing capacity in Estonia to serve its other customers, while deliveries to Ericsson continue from other Elcoteq plants.

Posted to the site on 17th June 2009