Ericsson and Elcoteq made an agreement for managing part of Ericsson’s activities in Estonia. According to Ericsson such operations will help to secure manufacturing capacity of Estonia. The estimate amount of the whole transaction is 40 million dollars that includes workforce, lease on manufacturing premises and inventory.

LONDON — Ericsson has signed an agreement with Elcoteq, a supplier of electronic manufacturing services to Ericsson, for part of its manufacturing operations in Estonia.

The purchase price of 30 million euro (about $40 million), relates to the transfer of about 1,200 employees and the lease on manufacturing premises in Tallinn, as well as inventory and some minor assets. Ericsson said it is making the purchase "to secure manufacturing capacity in Estonia."

Elcoteq has announced a restructuring plan and is undergoing consolidation of its manufacturing in Europe. Elcoteq makes radio access products for Ericsson's 2G and 3G basestations as well as optical- and RF transmission equipment.
Ericsson said that although it is making this purchase its strategy remains to outsource volume production. The transaction is expected to close during 2009 and requires formal approval by relevant antitrust authorities.