Ciena tops Nokia Siemens to win Nortel optical, metro Ethernet business
Ciena prevails in auction for Nortel business unit
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RESEARCH TRIANGLE PARK, N.C. – Maryland-based
Ciena Networks (Nasdaq: CIEN) prevailed over Nokia Siemens Networks with a $769 million offer for Nortel’s optical and metro Ethernet business.
Reuters reported early Monday that Ciena won with a combination of cash and notes.
Ciena later confirmed the news and noted that bankruptcy courts in the U.S. and Canada will review the bidding process on Dec. 2.
“These optical and carrier Ethernet assets bring exceptional technologies, talent and scale that will accelerate Ciena’s current strategy to deliver innovative network solutions to customers worldwide,” said Gary Smith, Ciena’s chief executive officer and president, in a statement. “With this combination, we are bringing together complementary technologies in switching and transport to create an innovative powerhouse with the scale to challenge the industry status quo and offer customers a practical path for transitioning to automated, optical Ethernet-based networking. We will be intently focused on integration as we work together to deliver the benefits of this transaction to customers, employees and shareholders.”
Added Philippe Morin, president of metro Ethernet for Nortel:
“Ciena provides a natural fit for Nortel’s Optical and Carrier Ethernet assets, providing an environment where our businesses' expertise and technology can be grown and leveraged. The combination of our two organizations creates an industry powerhouse with a heritage of innovation and a shared commitment to building and maintaining reliable networks. With today's agreement, Nortel customers can be assured that they will be working with a known, trusted and experienced partner who can ensure continuity of supply and continue Nortel’s heritage of innovation.”
In a statement, Nokia Siemens confirmed that it had lost out in the bidding, which started on Friday.
The auction is the latest in a series of business units that Nortel, which filed for bankruptcy in January, has sold off as part of its liquidation process.
Nortel still employs some 1,700 people in RTP.
“Nokia Siemens Networks confirms that, with its financial partner, it did not submit the highest bid for Nortel’s optical networking and carrier Ethernet assets in the bankruptcy court-sanctioned auction that began on Friday morning and extended through the weekend,” Nokia Siemens said in a statement issued in Finland. “Nokia Siemens Networks believes that its final offer represented fair value for the assets, and further bidding could not be financially justified.”
According to Reuters, Nokia Siemens was working with One Equity partners.
Ciena originally bid more than $500 million in cash and stock to establish itself as the “stalking horse” in the bidding process and set a base price for the ensuing auction.
Earl Lum, president of a wireless infrastructure research firm, told Reuters that Ciena’s winning bid was nearly one-times greater than the Nortel group’s annual sales and represented a “pretty good premium to the market.”
Ciena shares closed at $13.17 Friday and have fallen $3 in recent weeks due to analysts’ concerns about the impact the Nortel acquisition would have on the firm due to taking on debt.
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