Ciena signs agreement to purchase Nortel's optical and Ethernet assets
October 13, 2009--Network specialist Ciena Corporation (Linthicum, MD) entered into agreements with Nortel to purchase substantially all of the optical networking and carrier Ethernet assets of Nortel's Metro Ethernet Networks (MEN) business for $390 million in cash and 10 million shares of Ciena common stock.
October 13, 2009--Network specialist Ciena Corporation (Linthicum, MD) entered into agreements with Nortel to purchase substantially all of the optical networking and carrier Ethernet assets of Nortel's Metro Ethernet Networks (MEN) business for $390 million in cash and 10 million shares of Ciena common stock (see also "Nortel advancing discussions to sell more of its businesses" and "Photonics companies still looking for the light").
The product and technology assets to be acquired include Nortel's long-haul optical transport portfolio; metro optical Ethernet switching and transport solutions; Ethernet transport, aggregation and switching technology; and network management software products.
The proposed transaction would strengthen Ciena's global presence and bring together complementary technologies in switching and transport that will offer customers a practical path for transitioning to automated, optical Ethernet-based networking. Based on the closing price of Ciena's stock on Tuesday, October 6, 2009, the aggregate value of the shares to be issued by Ciena is approximately $131 million, bringing the value of the consideration to approximately $521 million. The assets to be acquired generated approximately $1.36 billion in revenue for Nortel in 2008 and $556 million (unaudited) in the first six months of 2009.
"This is a unique and exciting opportunity for us to accelerate our existing strategy and the pace of our growth plans by two to three years," said Gary Smith, Ciena's CEO and president. "We believe this transaction will position us for faster growth by giving us greater geographic reach, broader customer relationships and a deeper portfolio of solutions. We believe we are best positioned to leverage these assets, thereby creating a significant challenger to traditional network vendors."
Ciena is expected to make employment offers to at least 2,000 Nortel employees to become part of Ciena's global team of network specialists. The proposed acquisition would significantly enhance Ciena's existing Canadian-based development resources, making Ottawa the company's largest product and development center. As of the end of its fiscal third quarter, Ciena employed 2110 employees globally.
For more information, go to www.ciena.com.