Ericsson said today that it is buying the telecom services provider for $1.15 billion cash.
Piscataway, N.J.-based Telcordia provides mobile, broadband and enterprise communications software and services. It produced $739 million revenue for the fiscal year ended Jan. 31, 2011.
Telcordia’s EBITDA grew modestly while it was owned by the PE firms, while debt also declined, the person says. The investment was not a huge money loser for Providence and Warburg but clearly fell short of expectations, the Wall Street Journal reported.
In January, the PE firms put Telcordia up for sale. Credit Suisse advised on the process.
The PE firms will gain a small profit on the sale to Ericsson, one person says. Providence/Warburg are keeping the $170 million on Telcordia’s balance sheet, the source says. The sale was “not a huge home run” for the PE firms but “definitely more than a break even,” the person says.
Telcordia employed about 3,200 people when it was acquired by Providence/Warburg. The company now employs about 2,600 people. All are expected to join Ericsson. The sale is expected to close in fourth quarter, according to a statement.
For Ericsson, the deal is expected to add to the company’s earnings within 12 months after closing, the statement said.
Providence’s investment comes from its fourth fund which was raised in 2000. The pool has a 23.12% net IRR, according to September 2010 data from the Public Employee Retirement System of Idaho.
Officials for the PE firms declined comment.