Ericsson nabs Nortel switching unit


Ericsson nabs Nortel switching unit

Alex Scroxton

Ericsson has acquired Nortel's multi-service switching (MSS) unit for $65m (£41m) after successfully outbidding a consortium made up of private equity money and a little-known comms firm called Samnite Technologies.

Last month Nortel struck a stalking horse agreement with the private equity-led group, under the terms of which it would have bagged just $39m. However, realising almost double the original asking price of the unit will be a crumb of comfort to Nortel's creditors, although remaining shareholders are unlikely to see a penny.

For its money, Ericsson has acquired substantially all the assets - including IP and customer contracts - of the MMS unit, a former crown jewel in the Nortel empire.

The Swedes have filled their boots following the 2009 bankruptcy of Nortel; Ericsson picked up the vendor's CDMA and LTE business for $1.13bn in July last year, and in April 2010 it struck again, buying out Nortel's stake in the LG-Nortel JV for $242m.

John Luszczek, general manager of the 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 grown and nurtured over the past two decades," he added.

In a statement, Nortel said all MSS employees would have the opportunity to continue their employment with Ericsson, including those in certain EMEA jurisdictions, who will transfer to Ericsson by operation of law.

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