- Ericsson and Kapsch emerge as successful joint bidders for US$103 million in cash
- Sale to include substantially all of the assets of th global GSM/GSM-R business with approximately 680 Nortel employees
- U.S. and Canadian court approvals of sale will be sought at a joint hearing on December 2, 2009
Nortel Networks Corporation announced that its principal operating subsidiary Nortel Networks Limited (NNL),
and certain of its other subsidiaries, including Nortel Networks Inc.,
Nortel Networks UK Limited (in administration), and Nortel Networks SA
(NNSA) have concluded a successful auction of substantially all of the
global assets of Nortel’s GSM/GSM-R business. Telefonaktiebolaget LM
Ericsson ("Ericsson") and Kapsch CarrierCom AG ("Kapsch") are the
winning joint bidders with a purchase price of US$103 million in cash.
The sale is subject to court approvals in the U.S. and Canada, which
Nortel will seek at a joint hearing on December 2, 2009, and in France.
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. Nortel will work
diligently with Ericsson and Kapsch towards an expected sale close in
the first quarter of 2010, subject to the timing of obtaining
If approved by the courts, Ericsson will purchase the North
American GSM business and Kapsch will purchase the European and Taiwan
GSM businesses. Kapsch will also purchase the global GSM-R business.
Nortel has more than 15 years experience with this technology and is
the number one GSM-R provider globally.
Each bidder will assume the relevant customer contracts in
their specified regions as well as the products, specified patents
predominantly used in the GSM/GSM-R business and non-exclusive licenses
of other relevant patents.
Approximately 680 Nortel employees will receive offers of
employment from the joint bidders. This includes those employees
assigned to the GSM/GSM-R business in certain EMEA jurisdictions who
will transfer automatically to Kapsch by operation of law.
"This is a major step forward for our business. These
acquisitions will enable our customers to continue to benefit from the
product innovation and support that they’ve come to expect from us,”
said Graham Richardson, GM for the GSM/GSM-R business, Nortel. “Today’s
announcement is also a turning point for our employees, the majority of
whom will take their considerable expertise on to Ericsson and Kapsch."
“The transaction emphasizes Ericsson’s commitment to the North
American market and strengthens our position as the leading provider of
telecommunications technology and services in the United States and
Canada” said Hans Vestberg, incoming President and CEO of Ericsson.
“We have worked closely with Nortel on the GSM/GSM-R business
for over 20 years. This acquisition transforms Kapsch from a regional
player to the market leader in GSM-R,” said Thomas Schöpf, Chief
Operating Officer of Kapsch.
Mag. Georg, Chief Executive Officer of Kapsch, said:
GSM (Global System for Mobile communications) is the most
popular wireless technology standard for mobile phones in the world.
Nortel is a leading supplier of GSM networks and has worked with
operators worldwide on implementing the GSM family of access
technologies including GSM/GPRS/EDGE. Also based on GSM technology is
GSM-R (GSM for Railways) which provides a secure communications system
for railways operators.
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