Oct. 8--Ciena Corp.'s offer to acquire Nortel Networks Corp.'s optical networking business for $521 million would create the largest maker of network equipment in North America and position the technology company to compete more effectively on a global scale, experts said Wednesday.

Ciena, based in Linthicum, said Wednesday it has signed agreements to pay $390 million in cash and 10 million shares of Ciena common stock, valued at $131 million based on Tuesday's closing price, to acquire Toronto-based Nortel's optical networking and carrier Ethernet assets in North America, Latin America, the Caribbean and Asia.

Folding in Nortel's business could double Ciena's labor force and its revenue. Ciena had annual revenue of $902 million last year, while the Nortel assets to be acquired generated some $1.36 billion in sales last year and $556 million in the first six months of 2009.

Both companies manufacture equipment that connects communications networks, such as between cities and countries.

"It expands our customer base considerably and our geographical reach," said Gary Smith, Ciena's president and chief executive officer, in an interview Wednesday. "It deepens our technology in the same area we're in and provides a lot of scale for the company in terms of global reach."

Ciena, which employs 2,110, including 700 in Maryland, said it would offer jobs to at least 2,000 Nortel employees, which represents more than 85 percent of Nortel's optical networking and Ethernet workers. Smith said it is too early to say if the acquisition would lead to growth in Ciena's Maryland work force.

Nortel has been operating under Chapter 11 protection of the U.S. Bankruptcy Code since January, when it also sought creditor protection under the Companies' Creditors Arrangement Act in Canada.

Under bankruptcy rules, Nortel must file its asset sale agreement with the court and make a motion to establish bidding for an auction that would allow qualified bidders to submit better offers. Nortel will also file a similar motion with the Ontario Superior Court of Justice. After the bidding process, expected to happen within the next couple of months, final approval is required of both the U.S. and Canadian courts.

One analyst Wednesday said Ciena is unlikely to emerge the winning bidder in what is likely to be a competitive auction. In other auctions of Nortel businesses this year, winning bids have come with higher price tags than the initial "stalking horse" offers.