LG Electronics and Nortel signed a definitive agreement to form a joint venture that will offer telecom and networking solutions in the wireline, optical, wireless and enterprise areas for South Korean and global customers.
Nortel will own 50 percent plus one share in the joint venture, in exchange for which Nortel will contribute its South Korean distribution and services business and pay US$145 million and other non-monetary consideration. Separately, LG Electronics may be entitled to payments over a two-year period based on achievement by the joint venture of certain business goals.
LG Electronics and Nortel will nominate certain key executives to the management team of the joint venture. It is the intention of the parties to nominate J. R. Lee from LG Electronics to be chief executive officer and Paul House from Nortel to be chief operating officer. The LG Electronics Infrastructure business and Nortel’s South Korean operations had aggregate revenues of KRW 600 billion (US$530 million) in 2004.
“Today is another milestone for Nortel as we continue to demonstrate our commitment to open up the Asia region with a best-in-class technology leader,” Nortel CEO Bill Owens said. “South Korea leads the world in embracing technology that enhances the human experience. Our relationship with LG better positions Nortel in the dynamic and growing Asia market, will expedite research and development, and will benefit our global customers. Nortel is clearly playing to win.”http://www.nortel.com
http://www.lge.com
