Ciena Coughs Up $530 Million in Cash for a Slice of Nortel Networks

Paul Lilly

Network specialist Nortel announced on Monday that it has been selected as the high bidder in the auction of nearly all of the optical networking and carrier Ethernet assets of Nortel's Metro Ethernet Networks (MEN) business. Under terms of the deal, Ciena will pay $530 million in cash and issue $239 million in aggregate principal amount of 6 percent Senior Convertible notes due in 2017. All tallied, the deal is worth $769 million.

"These optical and carrier Ethernet assets bring exceptional technologies, talent and scale that will accelerate Ciena’s current strategy to deliver innovative network solutions to customers worldwide," said Gary Smith, Ciena’s CEO and president. "With this combination, we are bringing together complementary technologies in switching and transport to create an innovative powerhouse with the scale to challenge the industry status quo and offer customers a practical path for transitioning to automated, optical Ethernet-based networking."

Ciena has high hopes for its latest acquisition, and not without merit. In 2008, Nortel generated about $1.36 billion in revenue, and $556 million (unaudited) in the first half of 2009.

At least 2,000 Nortel employees will be offered employment to become part of Ciena's global team of network specialists, the company said.

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