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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

If another bid materializes, an auction will be held Feb. 24 in New York. Other bidders could include Huawei, Alcatel-Lucent (NYSE:ALU), Nokia Siemens (NOK, SI), Broadcom, Metaswitch and Sonus.

For more details about the Genband bid, check out Bert Hill’s story in the Ottawa Citizen.

Source: The Bizarre Nortel-Genband Deal