Report: Nortel in talks to sell-off assets to rivals
Canada's Nortel is in talks to sell-off its two main business units to rivals as an alternative to emerging from bankruptcy protection, the Wall Street Journal reports. According to unnamed sources, Nortel has received more interest than expected for both its mobile and enterprise businesses, which together accounted for US$6.7 billion in sales last year.
"What we are finding is that there may be a lot more value by selling rather than emerging [from bankruptcy]," a source familiar with the matter said. One company believed to be interested in acquiring Nortel's mobile equipment business is Nokia Siemens Networks (NSN). The report says that NSN is looking at the business as a way for the European-based company to strengthen its standing in the US market; Nortel is currently a supplier to major US mobile operators Verizon Wireless and Sprint Nextel. Meanwhile, the report adds that Avaya and Siemens are among several companies looking at Nortel's enterprise business, though neither company would comment on the matter.
The report notes that a sale of Nortel's mobile business - which generates the most cash for the company - would complicate plans for Nortel to emerge as a standalone company. CEO Mike Zafirovski said last week that the company hopes to complete its reorganisation plans and emerge from bankruptcy protection before mid-year as "a leaner and more competitive company." However, under bankruptcy law, Nortel must seek the most value for its creditors, which could mean breaking the company apart if suitable buyers are found. The company is currently some US$4.5 billion in debt and filed for bankruptcy protection at the beginning of the year.
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