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Local Tech Wire, AP
RESEARCH TRIANGLE PARK, N.C. – (Nasdaq: CIEN)) is offering cash and stock worth $521 million to acquire some of most-prized remaining business units as the fallen telecommunications company continues to liquidate.
The companies announced the agreement Wednesday, which establishes Ciena as the “stalking horse” in the bidding process. As part of Nortel’s bankruptcy, it will auction off the Optical Networking and Carrier Ethernet business. Ciena has the right to beat other offers.
According to a statement from Nortel, 85 percent of its 2,000 employees in the Optical Networking and Carrier Ethernet business would be offered jobs with Ciena.
“Today’s announcement is a positive step forward for the future of Nortel’s Optical Networking and Carrier Ethernet customers and employees," said Philippe Morin, president of Metro Ethernet Networks for Nortel. "The sale of these businesses to a strong and stable buyer enables the innovation of one of the foremost leaders in the optical industry to continue to thrive.
“Employees have done a tremendous job stabilizing our business under challenging conditions while continuing to deliver on product and service commitments,” he added. “We are particularly pleased that the agreements would offer a significant number of the employees in the Optical Networking and Carrier Ethernet teams an opportunity to continue their world-class innovation.”
Despite Nortel’s ongoing bankruptcy, which it declared in January, the Optical Networking groups has recorded 52 “wins” this year for its 40-gigabit networking solution and is continuing field trials of its 100-gigabit solution that is planned for release later this year.
Nortel employs some 1,7000 people at its campus in RTP, but its primary focus is Nortel’s Enterprise unit that is being acquired by Avaya.
Ciena is based in Linthicum, Md.
In previous auction of Nortel business units this year, the final prices have been substantially higher than the initial "stalking horse" bids.
In this case, Ciena is offering $390 million in cash and 10 million shares of Ciena common stock. The shares are currently worth about $131 million.
Nortel, a former telecommunications equipment giant that at one point accounted for one-third of the market value on the entire Toronto Stock Exchange, filed for bankruptcy protection in Canada and the U.S. in January.
The Toronto-based company has been selling its operations piece by piece.
Last month, Nortel announced its Enterprise Solutions division would be sold to New Jersey-based Avaya for $900 million. Avaya had originally bid $475 million in July but sweetened the offer to win an auction that began Sept. 11 and lasted several days.
Prior to that, LM Ericsson of Sweden agreed to pay $1.13 billion for Nortel’s wireless network business, beating a $650 million stalking horse bid put forward by Nokia Siemens, a joint venture between Finland’s Nokia Corp. and Germany’s Siemens AG.
"This is a unique and exciting opportunity for us to accelerate our existing strategy and the pace of our growth plans by two to three years," Gary Smith, Ciena’s CEO and president, said in a statement.