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Apax buys into Ericsson direct sales unit

Ericsson will retain a 20 per cent holding in the new company, Enterprise Solutions.

Communications supplier Ericsson has sold an 80 per cent stake in its Enterprise direct sales and service operations to Apax Partners Funds for E528m. Ericsson will retain a 20 per cent stake in the new company, Enterprise Solutions.

UBS Warburg and CIBC have been appointed to arrange a debt package in the region of E320m for the deal.

Enterprise Solutions will be a global communications network integrator for voice, data and mobility products and services. The new company will become Ericsson Enterprise’s largest and most sophisticated indirect sales channel, operating in the medium to high end of the enterprise market with advanced systems and network integration. It will continue build relationships with third party suppliers as part of its growth and development strategy. It has already established relationships product manufacturers Rockwell and Extreme Networks.

David FitzGerald and Nikos Stathopoulos will represent Apax Partners on the board of Enterprise Solutions. Lars E. Svensson will represent Ericsson. The transaction will be subject to regulatory approvals and is expected to close in April 2001.

David FitzGerald, a director at Apax Partners said: “Using Ericsson’s clear leadership position in mobility solutions, we expect the company to develop into the leading independent global network integrator and solution provider. The partnership with Ericsson gives us a world class brand, a strong customer base and a global sales infrastructure in a rapidly growing market.”

The move is part of Ericsson’s strategy of transferring direct sales operations to indirect sales partnerships. Last year, the company sold its MD110 PBX direct sales accounts in North America to Norstan, the fourth largest communications services provider in North America. The new Norstan business unit serves Ericsson Enterprise customers. Ericsson also pledged to continue to expand its indirect sales channels in North America. The financial terms of the agreement were not disclosed.

An Ericsson spokesperson told PEO that the company's strategy of transferring from direct to indirect sales is taking place so that it can focus on manufacturing, research and development of marketable products. “We see this as an aggressive move in the market that should lead to more market penetration for Ericsson Enterprise,” he said.