Ciena buys Nortel's metro assets
2000 jobs could be saved
The networking specialist will pay $769 million for the assets, $530 million in cash and the rest being covered by the issuance of $239 million of 6% senior convertible notes due 2017.
A motion to approve Ciena as the buyer will be heard by bankruptcy courts in the US and Canada on 2 December.
Gary Smith, Ciena’s CEO and president, said: “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.”
Philippe Morin, president, metro Ethernet networks for Nortel, said: “Ciena provides a natural fit for Nortel’s optical and carrier Ethernet assets. 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.”
The assets that Ciena will acquire generated approximately $1.36bn in revenue for Nortel in 2008 and $556 million (unaudited) in the first six months of 2009. Ciena expects the acquisition to add value to its results in its 2011 financial year.
Ciena is expected to offer at least 2,000 Nortel employees jobs.
Both the US and Canadian competition authorities have waived the customary anti-trust waiting periods for the deal, although it remains subject to other regional regulatory clearances and the customary closing conditions.
The transaction is expected to close in the first quarter of 2010.