Ciena today beat out Nokia Siemens Network to buy bankrupt Nortel’s metro Ethernet business for $769 million, winning the bidding war for the assets that it began in October. A court will still have to approve the deal that will see Ciena, which makes fiber optical equipment, pay $530 million in cash and issue $239 million in debt that will be due in 2017. The transaction will more than double Ciena’s sales when it closes in the first quarter of 2010.
Ciena reported fiscal 2008 sales of $902.4 million (it’s fiscal year ends Oct. 31). Sales for the first three quarters of fiscal 2009 were hit hard by the macroeconomic decline that began in September of 2008, and have totaled $476.3 million. The Nortel assets generated $1.36 billion in revenue for the Canadian company in 2008 and $556 million in the first six months of 2009, so Ciena is taking on a huge integration with this deal, which could more than double its sales and total employees (it’s expected to make job offers to at least 2,000 Nortel employees).
A motion to approve Ciena as the acquirer will be heard by bankruptcy courts in the U.S. and Canada on Dec. 2. Ironically, it was Nortel’s failure to sell its metro Ethernet business in September of last year that marked the beginning of the end for the venerable Canadian telecommunications firm.