Ciena bids $521m for Nortel's optical, Ethernet assets

Nortel has accepted Ciena's €353 million stalking horse bid for the company's optical networking and carrier Ethernet businesses.
 
Ciena has offered €264.3 million in cash and 10 million shares of common stock, worth €129.4 million, for the units, Nortel said
 
The assets include Nortel’s long-haul optical transport, metro optical Ethernet switching and transport and Ethernet transport, aggregation and switching products.
 
The offer has triggered a competitive bidding process, and also requires the approval of both US and Canadian bankruptcy courts as well as regulators from both countries.
 
Ciena CEO Gary Smith said he believed the deal will “position us for faster growth by giving us greater geographic reach, broader customer relationships and a deeper portfolio of solutions.”
 
But analysts have expressed concern at what they see as a steep asking price, with Standard and Poor's lowering its rating from “hold” to “sell.”
 
There are also concerns that the deal could bloat Ciena's operations. Ciena would incur integration costs of around $180 million from the acquisition, Smith said.
 
Ciena’s bid may also attract offers from much bigger rivals such as Cisco, Ericsson and Nokia Siemens.
 
The move would nearly double the company's workforce. Ciena, which currently has around 2,100 staff, has agreed to take on at least 2,000 Nortel employees.
 
But Smith said he expects the deal to become earnings accretive by fiscal 2011.

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.