DOW JONES NEWSWIRES
Nortel Networks Corp. (NRTLQ) has entered a "stalking horse" deal to sell substantially all of the optical networking and carrier ethernet assets of its Metro Ethernet Networks unit to Ciena Corp. (CIEN) for about $521 million.
Ciena, which said Monday it was in advanced talks to buy the assets, is offering $390 million in cash and 10 million shares in the deal.
On Nasdaq Tuesday, telecom-equipment maker Ciena closed at $13.05, down 7.9%. In pre-market trading Wednesday, Ciena is up about 1.8%.
Under the agreement, Nortel said at least 2,000 employees will be offered employment with Ciena.
The deal covers substantially all assets of the Optical Networking and Carrier Ethernet businesses globally, its industry-leading 40G/100G technology, and the related services business. It also includes all patents and intellectual property used in the businesses and provide for the transition of substantially all of Nortel's Optical Networking and Carrier Ethernet customer contracts.
Ciena said the assets to be acquired generated about $1.36 billion in revenue for Nortel in 2008 and $556 million in the first six months of 2009.
Nortel, which filed for bankruptcy protection in January and has selling off its operations piece-by-piece, will file the "stalking horse" agreement with the U.S. Bankruptcy Court and will seek a motion to establish bidding procedures for other qualified bidders.
Ciena expects integration-related costs of about $180 million, most of which it expects will be incurred in 2010. It also believes the deal will be "significantly accretive" to its fiscal 2011 results.
-By Judy McKinnon, Dow Jones Newswires; 416-306-2100; judy.mckinnon@dowjones.com