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Ericsson wins auction for Nortel's wireless assets
2009-07-25
TORONTO (Reuters) - Sweden's Ericsson has won an auction for the wireless assets of bankrupt Nortel Networks Corp in a deal valued at $1.13 billion, Nortel said on Saturday. The proposed sale, announced by Nortel in a news release, means Ericsson will own the Canadian company's key CDMA and next-generation LTE wireless technologies, which it put on the block after filing for creditor protection in January. Nortel said Ericsson will offer continued employment to a minimum of 2,500 Nortel employees. The statement did not say how many employees worked for the Nortel businesses that the company agreed to sell, and a spokesman was not immediately available for further comment. Last month, Nortel announced a "stalking horse" bid for the assets from Nokia Siemens Networks for $650 million, setting a floor price for potential buyers. BlackBerry maker Research In Motion also waded into the fray by announcing it was chasing a deal for the Nortel technology. But it complained that Nortel had effectively blocked an approach valued at $1.1 billion. Nortel fired back by saying RIM was refusing to comply with common confidentiality provisions that other bidders had agreed to follow. Toronto-based Nortel, once North America's biggest maker of telephone gear, filed for bankruptcy protection early this year, blaming the economic crisis for derailing a turnaround effort that began in 2005. Even before the economy hit the skids, Nortel had posted billions in losses and was forced to cut tens of thousands of jobs in hopes of reversing its moribund fortunes. However, these measures were not enough to offset a plunge in demand for its products from corporate clients and from wireless carriers that use its technology to operate their networks. Rivals like Alcatel and Lucent consolidated as Nortel sat on the sidelines, while Asian competitors captured market share with their lower-cost offerings. Nortel now employs roughly 25,000 people, down from 90,000 at the height of the technology boom at the start of the decade. Nortel now appears sure to sell itself in pieces rather than restructure under creditor protection to emerge as a scaled-down version of its former self. The company was once the poster child in Canada for high tech success and was the most heavily weighted stock on the Toronto Stock Exchange. Its shares on a consolidation-adjusted basis were worth more than C$1,100 each in mid-2000. Today, the stock has been delisted from the major exchanges and are changing hands at less than 10 Canadian cents each. The proposed sale is subject to joint of approval of U.S. and Canadian courts, scheduled for July 28. (Reporting by Frank McGurty; Editing by Will Dunham)
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