The planned $650 million acquisition, which will bring together the highly complementary assets of the two companies in the field of mobile radio access, adds further key talent and resources to enhance Nokia Siemens Networks' existing strength and momentum in LTE. The acquisition of Nortel's profitable CDMA business would significantly improve Nokia Siemens Networks' presence in North America and make it a leading supplier of wireless infrastructure products in the region.
Said Simon Beresford-Wylie, chief executive officer at Nokia Siemens Networks: "This agreement provides an important strategic opportunity for Nokia Siemens Networks to strengthen its position in two key areas, North America and LTE, at a price that makes good economic sense. It also represents stability for Nortel's existing customers and offers a great opportunity for employees to move into a stable future with an industry winner. The R&D organization in Canada would become a long-term wireless center of excellence within Nokia Siemens Networks, complementing our other global sites."
The transaction would see more than 2,500 Nortel employees, largely located in Ottawa, Canada and Dallas, US, but also including employees in Mexico and China, transferred to Nokia Siemens Networks. Approximately 400 of those employees are focused on LTE research and development, and would enhance the ability of Nokia Siemens Networks to provide innovation and strengthen its position in LTE, where it is already working with customers such as NTT DoCoMo in Japan. The support and development of Nokia Siemens Networks' existing product lines would be unaffected by this acquisition.
Export Development Canada (EDC), Canada's government-owned export credit agency, is supporting this transaction with a $300 million loan commitment. "We are delighted to have secured the backing of EDC for this transaction," said Luca Maestri, chief financial officer of Nokia Siemens Networks. "Nokia Siemens Networks is committed to Canada as an important centre of excellence for next generation wireless technology."
Due to Nortel's restructuring process, the transaction is subject to the approval of the US Bankruptcy Court and the Ontario Superior Court of Justice. Hearings by those courts to approve bidding procedures, break up fee and expense reimbursement will be held on or before 29 June 2009, with final sale hearings expected on 28 July 2009 in the US and 30 July 2009 in Canada. Closing of the transaction, which is expected to occur in the third quarter of 2009, remains subject to customary closing conditions, including receipt of necessary regulatory approvals.
Existing Nortel and Nokia Siemens Networks customers welcomed the agreement. "This news eliminates industry uncertainty and enhances CDMA and EVDO, today and in the future. We at Sprint are pleased to have the support of a strong and stable supplier to continue to deliver reliable technology and services that our customers rely on every day," said Dan Hesse, President and Chief Executive Officer, Sprint Nextel.