After eight months on the block and seven expressions of interest, Nortel (OTC:NRTLQ) unveiled the proposed sale of its carrier voice and applications business to Genband last month for $282-million. Like the other asset sales, it is a stalking horse bid now could see other bids before an auction is held.
Despite a lot of speculation about who might bid for the business, which generated $870-million in revenue in 2008, Genband came out of nowhere with its bid. It seems like a low price but what’s even more surprising is that the bid isn’t really worth $282-million. After taking into account a bunch of closing issues, the bid is actually $100-million less. (Source: Ernst & Young Monitor’s Report).
Some other strange parts about the deal include a $3.6-million payment by Nortel to One Equity Partners, which owns 35% of Genband, for providing financing to Genband. As well, there’s a break-up fee of $5-million.
The carrier business employs 2,185 full-time employees, including 592 in Canada, who mostly do R&D. In the Monitor’s Report, Genband said it has committed to retaining at least 1,638 employees
For more details about the Genband bid, check out Bert Hill’s story in the Ottawa Citizen.