Source Pravda.Ru

Ciena Intends To Purchase Nortel

    Ciena Corp., the maker of fiber-optic gear for the biggest U.S. phone companies, offered to buy Nortel Networks Corp.’s optical networking business for about $521 million to expand internationally.

  The price includes $390 million in cash and 10 million shares of Ciena common stock, the companies said today. The assets’ sales topped $550 million in the first half, Ciena said.

  The deal would allow Ciena, which gets about two-thirds of revenue from the U.S., to add to its fiber-optic network products and broaden its customer base in Europe and Asia. Nortel’s optical business operates in more than 65 countries and provides high-speed data networks in and between cities.

  The acquisition would be “significantly accretive” to operating results in fiscal 2011, Ciena Chief Executive Officer Gary Smith told analysts on a conference call today. The unit is being sold through a so-called stalking-horse agreement, where a single buyer provides a lead bid that other parties can then try to top. That means there’s no guarantee Ciena will win.

  Ciena, based in Linthicum, Maryland, rose 13 cents to $13.18 at 9:54 a.m. New York time in Nasdaq Stock Market trading. The shares had almost doubled this year before today.

  Nortel is selling the unit as part of a broader effort to shed businesses since entering bankruptcy protection nine months ago. The Toronto-based company has raised more than $2 billion from asset sales.

  Ciena would have to spend about $180 million to integrate the Nortel businesses, with most of those costs incurred in 2010, Smith said. Ciena said it would offer jobs to as many as 2,000 of Nortel’s employees if the deal goes through, according to Bloombergs report.

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