TORONTO - Ciena Corp. (Nasdaq:CIEN) will offer jobs to at least 2,000 Nortel employees after winning a three-day auction for the bankrupt Canadian company's optical and Ethernet business units.
Ciena's final cash and debt offer was worth US$769 million, about US$248 million more than it initially bid in October, the company said Monday.
The Maryland-based company emerged on top after a three-day auction in New York that began Friday, beating out telecom equipment maker Nokia Siemens.
The employee commitment appears to secure the jobs of the majority of workers from the division, which has about 2,250 employees according to Nortel.
Ciena's president and chief executive Gary Smith said the Nortel acquisition would accelerate the company's growth strategy.
"By combining these assets with Ciena's existing resources, our collective customer base will be able to rely on one of the largest and most innovative companies strategically focused on converged Ethernet networking," Smith said in a statement.
Ciena will pay US$530 million in cash plus US$239 million of convertible notes due June 2017 to acquire the Nortel unit. The company said Nortel's assets generated about $1.36 billion in revenue in 2008, and $556 million in the first six months of this year.
The company expects the purchase will be accretive to its operations by its 2011 financial year.
"What Ciena gets are the assets of a technology leader with a very significant base of customers, in an area that's relatively complimentary to its own business," said Carmi Levy, a technology analyst at AR Communications Inc.
Ciena is paying "significantly less than it would had to pay if it had to either build it out on its own, or if it tried to make a play for Nortel's optical business even a couple of years ago," he added.
The transaction marks the sale of one of Nortel's most-prized units and the final major piece of the company to be put up for sale. The former Canadian technology heavyweight has been selling off its divisions after filing for creditor protection in January.
So far, it has sold off several pieces of the business, including its next-generation packet core network component assets to Japanese electronics manufacturer Hitachi Ltd. for US$10 million, and its enterprise solutions division to New Jersey-based Avaya for $900 million.
Nortel said Monday that it will start the auction for its Global System for Mobile (GSM) business on Tuesday morning, after delyaing it from last week. The auction will include patents predominantly used in the GSM business and granting of non-exclusive licenses of other relevant patents.
Other pieces still waiting to be sold include Nortel's CVAS division, which is a joint venture with LG Electronics Inc. to deliver phone over the Internet.
In a release, Nortel said it was pleased with the deal, particularly with Ciena's commitment to retaining most of its employees.
"Ciena's commitment to the future of our product platforms, customers and employees represents an exceptionally positive outcome to a challenging journey that started over a year ago," said Philippe Morin, president of Nortel's Metro Ethernet Networks.
"Uniting our two optical businesses is a game changing event for the optical industry, creating a leader that has the end-to-end portfolio, industry innovation leadership, and significant global customer base to succeed in today's highly competitive market."
The sale is subject to U.S. and Canadian court approvals which Nortel will seek at a joint hearing Dec. 2.
Nortel said it hopes to close the sale in the first quarter of next year.