Ericsson will acquire Nortel's global multiservice switching assets for $65 million. Multiservice switching was one of the last remaining assets to be sold by Nortel, which put its operations up for sale after failing to restructure as a viable entity under Chapter 11 bankruptcy.
The assets include Nortel's Multiservice Switch – formerly Passport - 6400, 7400 and 15000/20000 frame relay and ATM switches, and Services Edge Router product line.The Services Edge Router line was obtained from the acquisition of Shasta Networks in 1999. Nortel discontinued the product, however.
The deal also includes substantially all customer contracts and certain intellectual property related to the MSS business, Nortel says. "Substantially all" MSS employees will have the opportunity to continue their employment with Ericsson, including those in certain international jurisdictions who will transfer to Ericsson by law, Nortel said.
The sale is subject to relevant court and regulatory approvals, including Canadian and US court approvals.
This is the fourth piece of Nortel that Ericsson has acquired. Others include the company's GSM, CDMA and LTE wireless businesses; and its stake in a joint venture with Korean electronics giant LG.
The assets were offered as a "stalking horse" bid after Nortel accepted an initial bid of $39 million for the business. And similar to previous asset sale arrangements, Nortel shareholders will not receive any value from the sale - the proceedings will result in the cancellation of these equity interests, the company said.