TORONTO – Nortel Networks has entered in to a ‘stalking horse’ asset sale agreement with Ciena for its global optical networking and carrier Ethernet businesses.
Financial terms of the deal are US$390 million in cash and 10 million shares of Ciena common stock. Based on the closing price of Ciena’s common stock on Tuesday’s NASDAQ, the shares have a current market value of approximately US$131 million, bringing the implied total value of the purchase to approximately US$521 million.
The agreement includes substantially all assets of the optical networking and carrier Ethernet businesses globally, including Nortel’s OME 6500, OM 5000 and CPL platforms, its 40G/100G technology, all patents and intellectual property used in the businesses, and most of Nortel’s customer contracts.
Under this agreement, but subject to any changes that may occur through the stalking horse and sale process, at least 2,000 employees, or more than 85% of the division’s employee base, would be offered jobs with Ciena.
A ‘stalking horse’ asset sale agreement is designed to encourage other potential buyers to bid on Nortel’s assets. Nortel must file a motion for the approval of the bidding procedures with the U.S. bankruptcy court and the Ontario Superior Court of Justice.
