Nortel wins approval for sale of businesses

AP News
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Posted: Dec 03, 2009 8:38 AM

(AP) _ Nortel Networks Corp. said late Wednesday it won court approval in the U.S. and Canada to sell two of its business units.

The larger unit, Nortel's global optical networking and carrier ethernet businesses, is going to Ciena Corp. The business is one of the most sought-after assets of Nortel, a once-dominant network gear maker that is selling itself off in pieces after filing for Chapter 11 protection in January.

The deal gives Ciena all products, contracts, and intellectual property, including technology that improves the speed and capacity of fiber optic networks.

Bankruptcy courts in Delaware and Ontario approved the deal over objections by Finnish rival Nokia Siemens Networks, which said that it would be willing to pay $810 million in cash for the business with its partner, One Equity Partners.

Ciena is paying $530 million in cash and taking on $239 million in convertible notes due June 2017.

The companies expect to close the deal in the first quarter of next year, though court approval is still needed in France and Israel.

Shares of Ciena, based in Linthicum, Md., fell 38 cents, or 3 percent, to $12.50 in premarket trading.

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Nortel, which is based in Toronto, also said Thursday that U.S. and Canadian courts have approved the sale of its North American GSM business to LM Ericsson Telephone Co. of Sweden.

Ericsson is paying $70 million in cash for the mobile telecommunications unit with Kapsch CarrierCom AG of Austria, which is acquiring the assets outside of North America for $33 million.

Nortel has already sold most of its wireless network business to Ericsson for $1.13 billion.