Ericsson emerged as the highest bidder for Nortel’s LTE and CDMA assets in a 12 hour auction which took place on Friday, tabling an offer of $1.13bn.
Most of the other parties known to be interested in the Nortel assets had publicly stated their maximum bids beforehand, giving Ericsson an indicator of how much it would need to stump up. The acquisition will give Ericsson a bigger footprint in North America especially as it includes CDMA contracts with North American operators such as Verizon, Sprint, US Cellular, Bell Canada and Leap.
Ericsson was competing against private equity firm MatlinPatterson’s offer of $725m, Nokia Siemens Network’s $650m proposal, and RIM’s $1.1bn offer, which RIM said has been rejected by Nortel. RIM said during the auction that it was told it could bid only if it promised not to bid for other Nortel assets for one year. But why was the restriction imposed?
RIM and Nortel are both based in Canada, and some Canadian officials said after the Ericsson bid was revealed that they may consider trying to block the sale. If the Ericsson purchase is approved, the company's Plano-based North American operations will have about $5 billion in annual revenue and more than 14,000 employees.
Canadian Industry Minister Tony Clement, who is said to have encouraged RIM to bid for the assets says all options are on the table in the government's evaluation of Ericsson's $1.13-billion US bid for Nortel's wireless unit, including the possibility the government may block the bid if it does not benefit Canada.