BREAKING NEWS: Ericsson buys Nortel

LM Ericsson of Sweden, which is working on Long Term Evolution (LTE) products in Montreal, has agreed to buy the carrier wireless assets of Nortel Networks Corp. for US$1.1 billion.

Ericsson was the highest bidder in an auction that wrapped up early Saturday.

Toronto-based Nortel, which has been operating under bankruptcy protection since Jan. 14, has been trying to sell most of its assets for months.

The assets Ericsson will gain are the code division multiple access (CDMA) products, plus the contracts to sell those products to North American carriers. It will also inherit Nortel’s LTE technologies. It was not immediately clear which employees, facilities or products would be redundant.

See IT World Canada’s updates to this story.

Ericsson outbid MatlinPatterson, a private equity firm holding about 10 per cent of Nortel’s long-term debt, and Nokia Siemens Networks, which agreed in June to buy Nortel’s wireless unit for US$650 million.

Nokia Siemens Networks has planned to use the Nortel unit to expand in North America. It has 75 emlpoyees in Canada and had planned to offer jobs to 2,500 Nortel employees, one-third of whom would have been in Canada.

Research in Motion Inc. of Waterloo had not formally bid in the auction, but the Globe and Mail reported that the BlackBerry maker was expected to support MatlinPatterson’s efforts after allegations to the government it had been blocked from purchasing its wireless products and services.

Ericsson president Carl-Henric Svanberg said in a statement the agreement includes important CDMA contracts with North American operators such as Verizon, Sprint, U.S. Cellular, Bell Canada and Leap, as well as LTE assets, certain patents and patent licenses relating to CDMA and LTE. Nortel’s customers will also benefit from the continued support of Nortel’s installed CDMA base and the migration path to LTE.

“Acquiring Nortel’s North American CDMA business allows us to serve this important region better as we build relationships for the future migration to LTE,” he said.

Ericsson will host a press conference Monday morning to outline more details of its plans for Nortel’s assets following the acquisition.

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