Research In Motion said its potential bid for bankrupt Nortel Networks' wireless assets was effectively blocked one day before bids were due. The Canadian BlackBerry maker said that Nortel and its bankruptcy advisers told RIM that it could qualify to bid on Nortel's CDMA and LTE assets only if it agreed not to submit offers for any other Nortel assets for one year.
The company said it was prepared to pay around $1.1 billion for Nortel's wireless businesses. RIM said Nortel and its advisers were aware that RIM wanted to buy other Nortel assets as part of a plan to keep key portions of Nortel under Canadian ownership.
Bids are due by 4 p.m. today and an auction is set for Friday in New York City. Nokia Siemens Networks has agreed to pay $650 million for the wireless units, although private-equity firm (and Nortel creditor) MatlinPatterson has indicated it plans on submitting its own bid.
"RIM is extremely disappointed," RIM co-CEO Jim Balsillie said in a statement. "RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM's leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn."
It is unclear, besides national pride, what interest RIM would have in Nortel's assets. UBS analyst Maynard Um speculated that RIM might have been looking to drive future technology standards, which could give it a leg up in the handset market.
"We are less convinced of potential tax benefits or engineering talent as motives," Um wrote in a note to investors. "However, aside from this longer-term in scope benefit, we find it difficult to understand why RIM would want to enter the infrastructure market given its lack of scale/experience as well as lower industry margin structure."
- see this Bloomberg article
- see this Reuters article
- see this Ottowa Citizen article
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