Ciena Studied NT Deal for a year...
excerpt
<< * Cash-and-stock offer is stalking horse bid
* Ciena plans to keep 2,000 Nortel employees
* Ciena shares up 4 pct (Adds Ciena CEO and analyst comments, share move)
By Scott Anderson and Ritsuko Ando
TORONTO/NEW YORK, Oct 7 (Reuters) - Canada's Nortel Networks (NRTLQ.PK) has agreed to sell its optical networking and Internet infrastructure business to Ciena Corp (CIEN.O) for $521 million, part of a series of sales following its bankruptcy.
Ciena, a U.S. network gear maker, hopes to expand its product lineup with the deal. The agreement includes all assets of Nortel's metro ethernet businesses, among them long-haul optical transport gear, switching technology, and network management software.
Ciena's offer of $390 million cash and 10 million Ciena shares is a stalking horse offer, which sets a floor price. That means Nortel may receive competing bids, but any other prospective purchaser would have to pay more.
Most analysts have said they do not expect other bidders to emerge.
Shares in Ciena, a top telecoms equipment maker, were up 4 percent to $13.58 on the Nasdaq. While there were worries that the deal could weigh on Ciena's operations and balance sheet, most analysts said it was a good move, given consolidation in the telecoms industry.
"For Ciena, it's a much longer-term positive in doing the deal ... Near-term, there are integration challenges, and the potential dilution leaves us to step to the sidelines," said RBC Capital Markets analyst Mark Sue.
Nortel, once North America's biggest telecommunications equipment company, filed for bankruptcy protection in January. It is selling off its assets rather than trying to restructure.
The Toronto-based company has already sold a group of its wireless assets to Sweden's Ericsson (ERICb.ST) for $1.13 billion. Its enterprise business is being sold to U.S.-based Avaya Inc [AVXX.UL] for about $900 million.
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Ciena said it plans to keep at least 2,000 Nortel employees, more than 85 percent of the number now working at the Nortel businesses. That would almost double Ciena's current work force of about 2,110 employees in Canada, the United States and India.
Despite the increased scale, Ciena CEO Gary Smith said he expects a quick transition as the company had been studying the acquisition for over a year.>>
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reuters.com
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