News Story
Nortel data-switching business sale wins approval from U.S. court
By Krystle Chow, Ottawa Business Journal Staff
Thu, Mar 26, 2009 3:00 PM EST
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Nortel's campus on Carling Avenue. (Etienne Ranger, OBJ)Shares of embattled Nortel Networks Corp.(TSX:NT) soared by more than 80 per cent as the news broke that it had received court approval to sell its data-switching division to Israel's Radware for $17.7 million.
A U.S. bankruptcy court in Wilmington in the district of Delaware on Thursday allowed Nortel to divest certain assets of its Layer 4-7 Application Delivery business, which it bought from Alteon WebSystems Inc. in 2000.
The announcement puts Nortel one step closer to selling the business to Radware (NASDAQ:RDWR), which in mid-February said it wanted to take over the business and offer its products under the merged Radware Alteon brand.
Nortel had originally planned a March 23 auction of the business, but was forced to cancel the auction after it did not receive any additional bids, according to a Bloomberg report.
However, Nortel spokesperson Karen Monaghan pointed out in an e-mail to OBJ that the deal is far from done.
"There are other conditions, including the approval of the Canadian courts, that must be met before the deal is closed," she wrote, adding that the motion will be presented before the Canadian courts on March 30.
Nortel's shares began climbing on Wednesday, ahead of the announcement, and by 3:36 p.m. on Thursday had spiked to 30 cents, up sharply from the 10-cent closing price seen on Tuesday.
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