Ericsson Buys Another Bit of Nortel

Ericsson AB (Nasdaq: ERIC) continues to sweep up Nortel Networks Ltd. 's assets as the Swedish vendor said today that it has agreed to buy much of the Chinese R&D firm Guangdong Nortel Telecommunication Equipment (GDNT) for $50 million in cash and on a debt-free basis.

GDNT is a joint venture between Nortel and a number of Chinese companies that was set up in 1995. The company provides R&D and manufacturing for CDMA and GSM products. Ericsson notes that GDNT has become an important supplier following the acquisitions of Nortel's CDMA and GSM business units. (See Nortel Wireless Winner: It's Ericsson! and Ericsson Buys Nortel's GSM Biz Too.)

As part of the deal, Ericsson will take on all of GDNT's 1,100 employees, including about 550 R&D engineers. Ericsson will also acquire the company's R&D and manufacturing facilities as well as support and customer service in the country.

The sale is expected to close in the first quarter of 2011.

Why this matters
Apart from the realization that Nortel still had assets to sell, the bankrupt Canadian vendor said in a press release today that the GDNT transaction is the last big asset sale for the company.

"This sale is a milestone in that it is the last of Nortel's significant business divestitures, [sales of which] have preserved both Nortel's technology innovation and its rich base of skilled employees," said George Riedel, Nortel's chief strategy officer, in a press statement.

For Ericsson, the acquisition of these CDMA and GSM capabilities in China will add to the pile of other Nortel assets it has acquired which include the multiservice switch business, GSM business in North America, as well as the CDMA business and LTE assets.

For more
For all the sordid details of Nortel's asset sales and what Ericsson has acquired, see these stories:

— Michelle Donegan, European Editor, Light Reading Mobile

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