Nokia Siemens Networks, a joint venture of Nokia Corp. (NYSE: NOK), the world's top mobile phone maker, and German Siemens AG (NYSE: SI), is likely to shell out $650 million (E465 million) as the 'stalking horse' bidder for Nortel Networks Corp. (NT.TO, NRTLQ.PK)’s LTE and CDMA businesses.
Stalking-Horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid. Other potential buyers (include Ericsson and Huawei) can’t submit bids lower than that of the 'stalking horse' i.e., Nokia Siemens Networks. Nortel CEO Mike Zafirovski said, "We're in advanced discussions with anywhere from three to seven companies for each one of the assets. If we're successful in getting the right value and the right integration planning and so on then Nortel as an entity which we know it will no longer be here in the future."
Nortel’s fall from grace to bottom less pit – piece-meal asset sale, the only option
Nortel Networks Corporation (TSX: NT and Pink Sheets: NRTLQ), formerly known as Northern Telecom Limited and sometimes known simply as Nortel, is a multinational telecommunications equipment manufacturer headquartered in Toronto, Ontario, Canada. At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX). Nortel's market capitalization fell from C$398 billion in September 2000 to less than $5 billion in August 2002. Nortel's stock price plunged from C$124 to $0.47 due to the burst of dot.com bubble. Since, then the company’s various attempts to come out of troubles have failed with each increasing the risk of further failure higher.
On January 14, 2009, Nortel filed for protection from creditors in the United States, Canada, and the United Kingdom, in order to restructure its debt and financial obligations. On February 19, 2009, Nortel announced a stalking horse bid from Israeli technology firm Radware to purchase its Layer 4-7 application delivery business. Nortel had acquired the application switch product line in October 2000 when it purchased Alteon WebSystems.
The company does not expect to successfully emerge from bankruptcy, and is in the process of selling off its various business units. Nortel’s asset value, as of now, is higher at piece-meal rather than whole.
