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Ericsson's Nortel Bid Nears Closure

Ray Le Maistre
LR Mobile News Analysis
Ray Le Maistre, Editor-in-Chief
7/29/2009

Having beaten out rival Nokia Networks in last week's auction of Nortel Networks Ltd. 's wireless assets, Ericsson AB (Nasdaq: ERIC) has now received approval from the Ontario Superior Court of Justice and the United States Bankruptcy Court for the District of Delaware for its $1.13 billion cash bid. (See Courts Approve Nortel/Ericsson Deal and Ericsson Delivers Knockout Blow to NSN.)

But, under the Investment Canada Act, Ericsson's acquisition of Nortel's CDMA and LTE assets may still need to be approved by the Canadian government, which is coming under intense pressure to intervene. (See Ericsson: Why We Want Nortel's Wireless.)

Local politicians in Nortel's home state of Ontario, as well as Canadian wireless device manufacturer BlackBerry (which feels hard done by as a result of last week's auction process), are urging government intervention, for which there is a recent precedent. This Calgary Herald report notes that, under the Act, the government blocked the foreign takeover of a Canadian company during the past year, albeit under different circumstances. (See RIM Cries Foul Over Nortel Bidding Process.)

And according to this report from the Toronto-based Globe and Mail, a review of the deal under the Act is very likely.

Nortel notes that "completion of the sale is subject to regulatory and other customary closing conditions, and the purchase price is subject to certain post-closing adjustments. Nortel will work diligently with Ericsson to close the sale later this year." It adds that "as part of this agreement, a minimum of 2,500 Nortel employees supporting the CDMA and LTE Access business will receive offers of employment from Ericsson."

In a separate release, Nortel CDMA partner Airvana Inc. noted that "Ericsson will bring technology excellence and experience providing support for networks with more than one billion subscribers worldwide to the growing CDMA market. We look forward to working with Ericsson to satisfy operators’ future CDMA infrastructure requirements and serving existing Nortel customers as well as new customers with a robust pipeline of EV-DO products and services."

Previously, Airvana had prematurely cozied up to Nokia Siemens. (See Airvana 'Looking Forward' to NSN/Nortel .)

— Ray Le Maistre, International News Editor, Light Reading

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