Ericsson has signed a conditional agreement with Danish company NKT Cables to divest its power cable operation
As a result of the agreement, about 320 employees and consultants, primarily based in Sweden, will transfer to NKT Cables
The value of the transaction is SEK 250 million and closing is expected during the beginning of the third quarter, 2013
The transaction is subject to relevant regulatory approvals.
NKT Cables is one of the largest power cable manufacturers in Europe. Ericsson (NASDAQ:ERIC, news, filings) believes that the power cable operation that currently resides within business unit Networks has potential to realize greater leverage and scale within NKT Cables where it will be core business.
The net sales for the power cable operation in 2012 was approximately SEK 1.5 billion.
The current best estimate is that the transaction will generate a net loss of approximately SEK -100 million and will, with current time plan, negatively impact business unit Networks’ operating income in the third quarter, 2013.
As a result of the agreement NKT Cables will take over a factory in Falun, Sweden.
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