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Ericsson shares drop following rights offering

NEW YORK-Shares of LM Ericsson dropped as much as 17 percent on Wall Street on the first day of trading of the company’s $3.14 billion rights offering, indicating many shareholders were selling their rights to buy the new shares.

Ericsson has said it will use the money to pay off debt and finance restructuring.

Ericsson also said it received 27.5 million shares of Infineon Technologies AG as payment for the sale of Ericsson’s microelectronics division to the company. Ericsson entered in to a forward sale of the Infineon shares with Schroder Salomon Smith Barney, under which Ericsson will receive approximately $294.3 million in cash.

Closing is expected to occur before the end of September.

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