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Electronics Production | May 06, 2009

Ascom aquires TEMS from Ericsson

This acquisition represents an important strategic step for Ascom. TEMS will form, with Ascom's Mobile Test Solutions (MTS), a new third division named “Network Testing”, from January 2010.
TEMS is a software company with a global market leadership position in optimization solutions for mobile networks. TEMS has approximately 300 employees in 17 countries around the globe. Its principal locations are in Skelleftea (Sweden), and Reston, Virginia (USA). In 2008, TEMS generated total revenues of CHF 165 million and is highly profitable. The acquisition significantly increases Ascom’s revenue and is expected to be EPS (earnings per share) accretive in 2010. Ascom anticipates the transaction to close in June 2009.

The acquisition of TEMS forms an excellent strategic fit with the current offering of MTS. TEMS adds global market leadership in mobile network optimization with a presence in 17 countries around the globe to MTS. As a result, Ascom will now be able to offer “one-stop shopping” solutions in the area of mobile testing and optimization for mobile telecom operators. TEMS currently has over 450 customers, including the world's twenty largest mobile network operators.

"This acquisition is a logical next step, following the take-over of Argogroup and Comarco WTS in 2008. TEMS represents an excellent strategic addition for Ascom and can be merged with the Mobile Test Solutions business unit to form a powerful third Ascom division. This will strengthen Ascom's global presence and, due to TEMS' very solid profitability, our target of a two-digit EBIT margin on a Group level becomes realistic in 2010," says Riet Cadonau, Ascom CEO.

Ascom will finance the purchase price of CHF 190 million through a combination of cash (CHF 70 million) and a syndicated credit facility (CHF 120 million) secured from a consortium of eight Swiss banks led by UBS and Credit Suisse.

Closing of the transaction is expected in June 2009. With this transaction, Ascom will have three clearly focused divisions going forward: Wireless Solutions, Security Communication and Network Testing – all three being homogenous units under the common umbrella of “mission-critical communication”.

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