Dying Nortel sells business to rival for $475 mn
Nortel, the once global telecom equipment giant that declared it would liquidate itself last month, has announced that it was selling its enterprise business to rival Avaya Inc. for $475 million.business Updated: Jul 21, 2009 12:55 IST
Nortel, the once global telecom equipment giant that declared it would liquidate itself last month, has announced that it was selling its enterprise business to rival Avaya Inc. for $475 million.
The Toronto-based telecom company said on Monday it was selling its Enterprise Solutions unit to its US rival in a 'stalking horse' agreement that keeps the options for future bidders open.
Last month, the 127-year-old Canadian company had entered into a deal with Nokia Siemens to sell all its entire wireless business for $650 million, preserving 800 top Nortel jobs in Canada.
Monday's deal is reportedly said to be similar to the deal with Nokia Siemens to preserve local jobs.
"We continue to be fully focused on running our operations and continuing to serve our customers while actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximises value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible," said Nortel president and CEO Mike Zafirovski.
He said the outgoing company was in discussions with interested parties for selling its other businesses.
"The many customers I have spoken with have been highly supportive of our efforts and transparency throughout this process. They value our employees and technology platforms and are appreciative of our service levels which are at multi-year highs," he said.
"We have some of the best talent in the industry and will explore all potential opportunities for them as we move through this process," the Nortel CEO added.
Said Joel Hackney, who heads Enterprise Solutions at Nortel: "The successful buyer will gain access to an industry-leading portfolio that is optimised for real-time communications, bringing speed and simplicity to customers' network environments and allowing them to enhance collaboration, streamline business processes and improve productivity."
Nortel, which has been in business since 1882, had to file for bankruptcy after suffering losses to the tune of $5 billion last year.
Even as its top bosses announced plans to restructure the company, a further loss of $507 million in the first quarter of this year sank it further.
The telecom giant's accumulated problems - from the bubble burst to an internal accounting scandal to the current meltdown - forced it to seek bankruptcy protection in the US and Canada this January.
Its bankruptcy plea was accepted ahead of its $107 million interest payment in January. At its peak, Nortel employed 90,000 people worldwide.