Ciena Buys Nortel's Metro Ethernet Business For $769 Million11/23/2009 11:52 AM Eastern
Ciena is picking up the optical and carrier Ethernet assets of Nortel's Metro Ethernet networks business, with a winning bid of $769 million in a bankruptcy auction.
In a statement Ciena president and CEO Gary Smith said the deal brings 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."
Toronto-based Nortel filed for bankruptcy protection in January 2009, after struggling to pay down its high debt and the economic slowdown. A motion to approve Ciena as the acquirer will be heard by bankruptcy courts in the U.S. and Canada on Dec. 2.
Ciena, based in Linthicum, Md., beat out the other bidder in the auction, Nokia Siemens Networks, which had teamed up with private-equity firm One Equity Partners.
On Monday, Ciena said it expects to make employment offers to at least 2,000 Nortel employees to become part of Ciena's global team of network specialists. That would roughly double Ciena's work force of 2,110.
The assets Ciena is acquiring generated $1.36 billion in revenue for Nortel in 2008 and $556 million in the first six months of 2009. Ciena said it expects the transaction to be significantly accretive to Ciena's results of operations in fiscal 2011.
According to Ciena, the deal is expected to close in the first calendar quarter of 2010. Ciena said it has been granted early termination of the antitrust waiting period under the U.S.'s Hart-Scott-Rodino Act and also has received notification from the Canadian Competition Bureau terminating the applicable waiting period for the proposed transaction under that country's Competition Act. The transaction remains subject to additional regional regulatory clearances and usual closing conditions.