Nortel sells business communications unit

Nortel Networks Corp. has reached an agreement to sell off most of its Enterprise Solutions unit, in a deal that will potentially see a key chunk of its remaining business go to Avaya Inc. for US$475 million.

TORONTO — Nortel Networks Corp. has reached an agreement to sell off most of its Enterprise Solutions unit, in a deal that will potentially see a key chunk of its remaining business go to Avaya Inc. for US$475 million.

The Enterprise unit supplies phone systems and other communications equipment to businesses and large organizations around the world, and had remained one of the biggest parts of the business that hadn’t found a buyer.

Nortel president and CEO Mike Zafirovski said it was an orderly sale of a well-performing businesses.

“We’re very confident that this is a great thing for employees and for customers,” Zafirovski said.

New Jersey-based Avaya — spun off from Lucent several years ago — has been a rival of Nortel and has long been considered a leading contender to buy the Toronto-based company’s Enterprise unit, which sells critical communication systems to the IT departments of companies and public-sector organizations.

Zafirovski noted Avaya would assume a $28 million loan as part of the agreement. However, they would not obtain receivables or cash and would only get the rights to Nortel patents used exclusively in that division of the technology firm.

Meanwhile, Research In Motion Ltd. (TSX:RIM) said Monday that it has effectively been prevented from submitting an offer for the Nortel wireless business because its desire to buy other Nortel assets as well.

“RIM sought to be qualified as a qualified bidder in Nortel’s auction bidding process for the Wireless Business, but RIM was told it could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year,” the company said.

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