By Senad Karaahmetovic
Shares of Ericsson (BS:ERICAs) (NASDAQ:ERIC) are trading nearly 4% higher in pre-open trading after the company confirmed it reached an agreement with the U.S. Department of Justice (DoJ) over non-criminal breaches of the 2019 Deferred Prosecution Agreement (DPA).
The Swedish telecom giant will plead guilty and pay a criminal penalty of more than $206 million, which will bring the DPA to an end. Ericsson used external consultants to bribe foreign government officials.
“Taking this step today means that the matter of the breaches is now resolved. This allows us to focus on executing our strategy while driving continued cultural change across the company with integrity at the center of everything we do,” Börje Ekholm, CEO of Ericsson, commented.
Ericsson is still under investigation by the DoJ and the U.S. Securities and Exchange Commission (SEC) for its dealings in Iraq.
Citi analysts weighed in positively on the agreement.
“It is positive that the DPA has been brought to a close, but, in our opinion, the Iraq investigation remains an overhang on shares. Our rating is Neutral as cheap valuation is offset by the potential for further penalties related to its Iraq conduct and margin weakness,” the analysts wrote.