Phone maker Ericsson AB has won the auction for part of bankrupt Nortel Networks Corp’s wireless unit with a bid of $1.13 billion in cash, the companies said today.
Ericsson, in a press release said it is acquiring “an installed base and a healthy business” and “significantly expands Ericsson’s footprint in North America.” The bid is subject to court approvals in the U.S. and Canada as well as other regulatory and closing conditions.
With the winning bid, Ericsson gets several technology assets including Nortel’s CDMA business, presently used by various U.S. wireless carriers including Verizon and Sprint, and substantially all of Nortel’s next generation mobile technology assets known as LTE Access. LTE, which stands for Long Term Evolution, promises to usher in the fourth generation, or 4G, wireless technology into North America.
The acquired North American business business generated about $2 billion in sales for 2008 with “robust profitability,” according to Ericsson. Ericsson’s North American operations, which include other wireless technologies, mostly GSM and WCDMA and generated $2.7 billion in sales last year, will have more than 14,000 employees with the acquisition, Ericsson said. GSM is being used by U.S. carriers AT&T and T-Mobile.
As part of the agreement least 2,500 Nortel employees supporting that technology will receive offers of employment from Ericsson. About 400 of the employees are focused on LTE technology, said Carl-Henric Svanberg, Ericsson’s President and Chief Executive Officer.
The sale is expected to close later this year. It will seek court approval for the sale on July 28, 2009.
Nortel’s CDMA contracts include North American operators such as Verizon, Sprint, U.S. cellular, Bell Canada and Leap, as well as LTE assets, certain patents and patent licenses relating to CDMA and LTE.