Eltek ASA entered into and completed a definitive share purchase agreement for the sale of Nera Networks AS to Ceragon (UK) Limited, a wholly owned subsidiary of Ceragon Networks Ltd , being a leading provider of high-capacity, 4G/LTE-ready wireless backhaul networks. The Transaction enables Eltek to focus on its profitable power electronics business and the growth opportunities in renewable energy markets. For Nera Networks and Ceragon the Transaction marks the creation of a world leader in wireless backhaul solutions.
Nera Networks has been sold for a cash consideration of USD 48.5 million (approximately NOK 284 million) on a cash and debt free basis. Combined with release of bank guarantees of approximately NOK 125 million related to Nera Networks projects, the net proceeds from the Transaction will strengthen the financial platform to pursue growth opportunities in renewable energy markets such as solar power and electric vehicles.
”We are one of the global leaders in telecom power and are growing our business in industrial power applications. We also see a wealth of opportunities in renewable energy and wish to focus both management resources and financial capabilities towards our core activities and these growth initiatives”, said CEO Jørgen Larsen in Eltek.
Assets affected by the transaction will be reported as ‘held for sale’ per 31 December, 2010, at fair market value less cost of sale. This implies a material non-cash impairment of assets, mainly related to intangible fixed assets. As a consequence, the net result after tax from discontinuing operations is expected to be negative by approximately NOK 200 million in the fourth quarter 2010. Following the completion of the transaction, an additional negative effect in the range of NOK 40-50 million related to cumulative currency translation differences will be reported as result from discontinuing operations in the Income Statement for the first quarter 2011.
Larsen said Eltek has evaluated several strategic alternatives for the future development of the microwave transmission activities in Nera Networks, and he believes a business combination with a leading wireless backhaul player like Ceragon provides the highest benefit to Nera Networks’ customers and employees.
”We believe the combination of Nera Networks’ Long-Haul capabilities and Ceragon’s Short-Haul solutions creates a broad ”best-of-breed” portfolio, and the scale and scope required to grow profitably going forward”, said Larsen.
Headquartered in Tel Aviv, Israel, Ceragon runs a global operation with network deployments in more than 100 countries. The company shows strong and profitable growth, and reported a revenue increase of 40 percent to USD 183 million in the first nine months of 2010.
”This is a very important step for both of our companies, and one which will allow us -together- to immediately become the premier microwave backhaul specialist at a crucial juncture for the industry”, said Ira Palti, President and CEO of Ceragon.
”We are in the early stages of a period of demand driven by continued subscriber growth in key regions and exponential increases in mobile data. During such a period, scale and reach are particularly important. This combination achieves both, with minimal integration risk due to the complementary nature of the two companies”, said Palti.