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Report: ECI sold to Russian company

Russian press says Israeli telecom networking infrastructure provider bought by local company called MMR. Deal estimated at NIS 5 billion

Tani Goldstein
Published: 02.02.12, 07:04 / Israel Business

Israeli telecom networking infrastructure provider ECI Telecom has been sold to a Russian company called MMR, local media reported Wednesday.


Rumors among ECI workers put the deal's value at NIS 5 billion (about $1.3 billion), but accurate numbers have yet to be released. The company has declined comment.


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Russian press reported in November 2010 that ECI's controlling shareholder, Shaul Shani, suggested that Russian President Dmitry Medvedev acquire the telecom company for $2.5 billion. The price discussed reflected a 100% premium on the purchase price in 2007.


Russian news website CNEWS reported that Russian organization for financial assistance was behind the initiative to sell ECI to a Russian company.


The organization's deputy chairman, Mikhail Esipov, noted that ECI was the only telecom company to provide Russia with its full technology and codes for all of its software.


Russian sources have estimated that many companies would be able to set up research and development centers based on ECI's technologies, and that this would seriously stimulate the Russian high-tech industry, which is currently finding it difficult to take off despite the local government's statements and the decision to turn it into a national preference industry.


The deal's supporters say that if ECI becomes a Russian company, the country will be able to move up in the high-tech industry and develop products at an international level.


Shani, who heads the Swarth fund, bought 100% of ECI's shares in 2007 together with Dutch partners for $1.24 billion. In 2007, the company presented a net income of $4.7 billion.


The company, which employs some 2,600 workers, is well known in the Russian market. Its technological solutions are used by local communication giants like Svyazinvest, MTS, Comstar, Synterra and others. It is also active in the optics industry.


ECI has experienced ups and downs in its financial situation in recent years, as well as quite a few dismissal rounds. About a year and a half ago, the company fired some 100 development workers in Israel and abroad.



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