Ericsson to pay $1.13 billion for Nortel wireless tech
Swedish telecom giant beats out two others in an auction for the CDMA and LTE wireless tech assets of bankrupt Nortel.
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Ericsson cast the $1.13 billion winning bid in an auction for the wireless assets of bankrupt Nortel Networks, the companies said Saturday.
The Swedish telecommunications giant picked up Nortel's CDMA and next-generation LTE wireless technologies. As part of the agreement, at least 2,500 Nortel workers supporting CDMA and LTE will be offered jobs at Ericsson.
CDMA, or code division multiple access, is one of two major networks operating in the U.S. and is used by Verizon Wireless and Sprint Nextel. LTE, or Long Term Evolution, is 4G wireless technology that will potentially replace today's mobile networks.
"This deal, along with our recently announced Sprint service agreement, truly positions Ericsson as a leading telecoms supplier in North America," Ericsson CEO Carl-Henric Svanberg said in a statement.
The purchase includes the CDMA contracts with Verizon and Sprint, as well as with U.S. Cellular, Bell Canada, and Leap, Ericsson said.
Ericsson was one of three bidders in Friday's auction. Nokia Siemens Networks and private equity firm MatlinPatterson were its competitors.
In mid-June, Nokia Siemens offered $650 million for Nortel's assets. That offer set others into motion and led to the auction.
"Our final offer for Nortel's assets represented a fair price, and we did not enter this process with a win-at-any-cost mindset," Bosco Novak, Nokia Siemens' chief markets operations officer, said in a statement.
Ericsson's bid is still subject to bankruptcy court approval in the U.S. and Canada.
The purchase virtually ensures that Nortel will sell off the rest of its businesses, instead of reorganizing into a smaller company.
"Nortel remains focused on finding the right buyers for our other businesses," Nortel CEO Mike Zafirovski said in a statement.
Once a giant in wireless gear, Toronto-based Nortel filed for bankruptcy earlier this year.
Nortel was founded in 1895 as Northern Electric and Manufacturing and supplied telecommunications gear for Canada's young telephone system. At the height of its glory days about 10 years ago, Nortel was worth $250 billion and had more than 90,000 employees.