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November 24, 2005

NEC to take sole ownership of phone subsidiary

Japanese electronics giant NEC Corp has announced plans to spend JPY 33.5bn ($282.5m) to acquire the shares it does not already own in its telephone systems subsidiary, NEC Infrontia.

By CBR Staff Writer

NEC currently owns 53.3% of the company, and is offering minority shareholders JPY 569 ($4.79) per share, a 19% premium on NEC Infrontia’s share price before the plans were announced, which values it at $605m.

NEC said the shift in technology towards IP-based network infrastructure meant that its PBX products were becoming obsolete. It plans to use its IT, network and mobile technologies to further develop NEC Infrontia’s IP telephony and point-of-sale terminal business, and integrate development resources of overlapping products. It said that the change in ownership would deliver higher profits for NEC Infrontia, and that NEC’s integrated IT/Network Solutions business would become more competitive.

In its fiscal year 2005, NEC Infrontia recorded sales of JPY 83.8bn ($705.6m), generating a net profit of JPY 121m ($1.0m).

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