Nortel Networks Corporation announced that it, its principal operating subsidiary Nortel Networks Limited (NNL), and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited (in administration), have concluded a successful auction of substantially all of the assets of Nortel's Multi Service Switch businesses globally. Telefonaktiebolaget LM Ericsson ("Ericsson") has emerged as the winning bidder with a purchase price of US$65 million.
Under the terms of the agreements, Ericsson's purchase includes substantially all assets of the MSS business globally including the associated Data Packet Network (DPN) and Services Edge Router (Shasta) product groups. These agreements also include substantially all customer contracts and certain intellectual property related to the MSS business.
The sale is subject to relevant court and regulatory approvals, including Canadian and U.S. court approvals. Nortel will work diligently with Ericsson to close the sale expeditiously, subject to the timing of regulatory required approvals.
Substantially all MSS employees will have the opportunity to continue their employment with Ericsson, including those in certain EMEA jurisdictions who will transfer to Ericsson by operation of law. The sale is also subject to certain regulatory approvals, information and consultation with employee representatives and/or employees in certain EMEA jurisdictions, other customary closing conditions and certain post-closing purchase price adjustments.
Commenting on the announcement, John Luszczek, General Manager of Nortel's MSS business said: "Today's announcement is welcome news for so many stakeholders - our customers, partners, suppliers and employees. It is yet another proof-point of Nortel's ongoing commitment to preserve innovation and customer relationships that we have nurtured and grown over the past two decades."
"Our focus now is to work closely with Ericsson to ensure as seamless a transition as possible for our customers. At the same time, we will continue to deliver the superior service that our customers have come to expect from Nortel."
In the 1990s, Nortel built some of the largest carrier and enterprise data networks in the world, leading to the establishment of this market segment category and Nortel MSS becoming recognized as an industry leader.
As previously announced, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.