
Redback will retain its management team after the acquisition and operate as a wholly-owned subsidiary of Ericsson.
The firm will continue to develop broadband routing technology supporting, phone, video and mobility services over Internet-based infrastructures.
The acquisition, which is expected to involve a tender offer for all outstanding shares of Redback common stock, is subject to customary closing conditions and regulatory approvals. The deal is scheduled to be completed in early 2007.
"Video changes everything about networks today," said Kevin DeNuccio, Redback president and chief executive, who will report directly to a management board chaired by Ericsson president and chief executive Carl-Henric Svanberg.
The total addressable market for IP edge routing is expected to exceed $5bn by 2009, according to the Yankee Group.
Ericsson and Redback believe that there is market opportunity to upgrade more than two billion wired and wireless users worldwide over the next 10 years to IP-based broadband infrastructures.