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Ericsson takes control of Marconi branch

| Thursday, Jan. 26, 2006

Ericsson AB took control of the former Marconi Corp. Data Networks division in Marshall this week, including the acquisition of its five-building campus, for $64 million.

"All of the employees on this campus and reporting through this business have received employment offer letters, and are now officially Ericsson employees," said spokeswoman Colleen Rosander.

The county values the property for tax purposes at $59 million. The state collected $642,000 in real estate transfer tax, with Marshall and the North Allegheny School District collecting $321,000 each.

Ericsson agreed in October to pay $2.1 billion for most of the business units of London-based Marconi Corp., including the local division.

"The Marconi businesses are an excellent fit for Ericsson, and we are delighted to welcome about 6,660 Marconi employees to Ericsson. This is a powerful combination that will bring value to Ericsson as well as our customers who will substantially benefit from the combination of the two companies," said CEO Carl-Henric Svanberg in a statement.

One day after the announcement of the deal in October, Svanberg visited the Marshall Marconi campus, where he reassured about 500 employees that he expected no significant job losses in the Pittsburgh area as a result of the acquisition.

He also said he was confident that the structure in place for Marconi's business with the U.S. federal government, which provides more than half of the unit's $250 million in annual revenue, would likely remain intact after the deal was completed.

Founded as Fore Systems Inc. by four Carnegie Mellon University computer science professors in 1990, the Data Systems division was acquired by what became Marconi in 1999 for $4.5 billion. At its height it employed nearly 2,000 locally, but went through several downsizings after the Internet bubble burst in 2000.

In 2003, Marconi's creditors took control of the company, swapping more than $6 billion in debt for equity. The company's final nail in the coffin as an independent player, as telecommunications equipment sector consolidated, came last summer when its largest customer, Britain's BT Group Inc., shut it out of a $20 billion rebuilding of its network, dubbed the 21st Century Network.

Ericsson was selected as one of the vendors for the BT project.

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