Ericsson announces cash offer to acquire LHS

Ericsson (NASDAQ:ERIC), through a wholly owned subsidiary, today announces a voluntary public cash offer to acquire LHS AG ("LHS") (XETRA:LHS) for EUR 22.5 in cash per share (the "cash offer"), valuing the company at approximately EUR 310 million. The cash offer represents a premium of 33 percent to the LHS one month average share price until June 4, 2007 of EUR 16.9. With the acquisition Ericsson strengthens its leading offering in revenue management with a fully integrated convergent charging and billing solution and expands its customer base.

• Ericsson offers EUR 22.5 per share in cash.
• Total enterprise value of EUR 310 million.
• Ericsson has agreed to acquire 55.1 percent of the registered share capital and has entered into irrevocable undertakings to secure 20.0 percent of the shares. In total Ericsson has secured 75.1 percent of the registered share capital.
• EPS accretive from 2008 onwards, excluding possible depreciation of intangibles.
• Combines Ericsson's prepaid solutions with LHS postpaid offering to provide a fully integrated convergent charging and billing solution for mobile and fixed operators.
• Expands Ericsson's customer base and enables significant cross-sell opportunities.

Carl-Henric Svanberg, President and CEO of Ericsson, says: "Operators are quickly moving towards convergent charging and billing solutions to enhance their relationship with consumers, improve cost efficiency and limit financial risk. Ericsson and LHS form a strong constellation of prepaid and postpaid solutions ready to immediately capture this opportunity. Ericsson's leadership in real-time charging and mediation, together with the leading billing and customer care solutions of LHS, make the two companies a leading player in revenue management and strengthen our overall multimedia offering."

The multimedia market is quickly evolving and converging: industries, (telecom, media and internet), technologies and payment options. Operators are adapting in order to leverage the opportunities modern networks enable and on consumers' growing demand for new services, in a cost-efficient manner. End-to-end revenue management solutions must be able to handle convergent technologies including IP-based broadband services, a variety of business models and partner relationships, as well as be payment-option agnostic.

LHS is a leading billing and customer care software and services company recognized for its competence, award-winning solutions and solid market performance. LHS has more than 120 installations, complementing the strong Ericsson base of more than 150 customers in prepaid/real-time charging, and about 300 customers in mediation. The acquisition offers significant potential for revenue synergies from cross-selling and greenfield opportunities.

LHS was established as an Independent Software Vendor (ISV) in 2004. The company employs about 550 people and has its headquarters in Frankfurt, with regional offices in seven countries. LHS sales in 2006 amounted to EUR 71.6 million (54 percent increase YoY) and the adjusted EBITDA margin was 17 percent.

The transaction is expected to be accretive from 2008 onwards, excluding possible depreciation of acquired intangibles.

Full press release

Ericsson announces cash offer to acquire LHS

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