Ericsson will buy Redback Networks, a maker of carrier edge routers, for $2.1 billion.
Redback makes routers for delivering voice, video, data and mobility services at the outer edge of carrier networks. It will become a wholly owned subsidiary of Ericsson but will retain its management team.
Carriers that once delivered simple DSL 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 multi-service router technology. After the acquisition, which is expected to close in early 2007, the company will accelerate its product development and gain global reach and financial resources, Redback said.
Kevin DeNuccio, Redback's CEO, will report to a management board led by Ericsson CEO Carl-Henric Svanberg. Ericsson will make a tender offer for all outstanding shares of Redback stock at $25 per share.