Local Tech Wire 

Private equity firms eye a Nortel-Motorola asset merger, U.K. paper says

More Nortel rumors surface

On The Web

• Financial Times report
• Barron's report

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RESEARCH TRIANGLE PARK, N.C. — Will Nortel’s embattled CEO Mike Zafirovski regain his mojo and save Nortel by reuniting with Motorola, his former company? Don’t laugh.

In the soap opera known as the Nortel bankruptcy, a media report has private equity firms interested in combining assets of the telecommunications gear-maker with the handset business of financially troubled Motorola. Interestingly, Nortel paid millions to pry Mike Z. away from Motorola, where he earned high marks for developing the at-one-time red-hot Razr.

The Financial Times is reporting today that a “number of private equity firms are targeting” Motorola and Nortel for some kind of buyout and consolidation. Nortel reportedly is shopping parts of its business as it seeks to reorganize under bankruptcy protection, a process it launched in January. In the interim, the company is laying off thousands of workers and seeking to preserve cash.

Looking at Nortel, which employs around 2,000 people in RTP, is the group Advent International, according to the British newspaper.

“The source said that Advent was looking to acquire the handset business as well as other businesses from Nortel and merge them together into a new group,” the newspaper said. “The deal is still in its early stages, the source added. Motorola and Nortel declined to comment.”

Another possible suitor, the paper added, is CVC.

A combination of Motorola and Nortel in some form isn’t new. “The companies attempted similar negotiations a few years after the burst of the telecom bubble,” a team of three reporters wrote.

Interestingly, on Monday, Mark Veverka of Barron’s pointed out that Mike Z. has a big fan in telecom analyst Ed Snyder of Charter Equity Research. Why? Because of what Zafirovski did before he took on the challenge of trying to salvage Nortel.

However, Snyder said he is convinced Nortel won’t survive.

"It was a noble attempt, but Mike Z's efforts may have fallen short," Snyder told Veverka. There was "too much damage and wasted time with the financial chicanery by the previous crew to get enough momentum through this storm."

So Nortel dismembers itself, private equity firms swoop in to buy Motorola pieces and merge these elements into a new telecom entity led by Mike Z.? Stranger things have happened.

The Skinny

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