Ciena snaps up Nortel’s Metro Ethernet assets

Ciena Corporation, the network specialist, announced that it has been selected as the successful bidder in the auction of substantially all of the optical networking and carrier Ethernet assets of Nortel’s Metro Ethernet Networks (MEN) business. Ciena has agreed to pay US$530 million in cash and issue US$239 million in aggregate principal amount of 6 per cent Senior Convertible notes due 2017 for a total consideration of US $769 million for the assets.

A motion to approve Ciena as the acquirer was heard by bankruptcy courts in the US and Canada on December 2.

“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. We will be intently focused on integration as we work together to deliver the benefits of this transaction to customers, employees and shareholders.”

The assets to be acquired generated approximately US$1.36 billion in revenue for Nortel in 2008 and US$556 million (unaudited) in the first six months of 2009. 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 transaction is expected to close in the first calendar quarter of 2010.