Nortel Watch: Ericsson and Kapsch Win GSM/GSM-R Units

"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, general manager for Nortel's GSM/GSM-R business, in a statement. "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 sale is subject to court approval in the U.S. and Canada, for which Nortel has requested a joint hearing for Dec. 2. It will also need approval from courts in France. Ericsson is buying the GSM unit's North American assets and Kapsch is buying the EMEA and Taiwan GSM businesses.

Nortel said about 680 employees will receive offers of employment from Ericsson and Kapsch.

Ericsson, formally known as Telefonaktiebolaget LM Ericsson, and Kapsch, formally known as Kapsch CarrierCom AG, become the latest in a line of companies to acquire substantial Nortel assets following the once-powerful networking titan's January 2009 bankruptcy.

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Earlier this week, Nortel selected Ciena as the winning bidder for Nortel's global Optical Networking and Carrier Ethernet business for a purchase price of $530 million in cash, plus $239 million in convertible notes due June 2017. Nortel has sought a joint hearing for U.S. and Canadian courts on Dec. 2 and also seeks approval from courts in France and Israel.

Under the terms of the Ciena deal, a minimum of 2,000 Nortel employees will receive employment offers from Ciena.

"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," said Philippe Morin, Nortel's president, Metro Ethernet Networks, in a statement earlier this week.

Other major pieces of Nortel have been auctioned off in recent months, with final acquisitions awaiting court and regulatory approval. Ericsson bought Nortel's CDMA and LTE Access carrier wireless division for $1.13 billion. Then, in September, Avaya won the bidding for Nortel's enterprise solutions business for $900 million and $15 million for an employee retention program. Finally, in late October, a large portion of Nortel's next-generation packet core network components business went to Hitachi for $10 million.