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Based on the closing price of Ciena's stock on 6 October 2009, the aggregate value of the shares to be issued by Ciena is approximately USD131m, bringing the value of the consideration to approximately USD521m.
The assets to be acquired generated approximately USD1.36bn in revenues for Nortel in 2008 and USD556m of unaudited revenues in the first six months of 2009.
Under the agreement announced on Wednesday, the product and technology assets to be acquired include Nortel's long-haul optical transport portfolio; metro optical Ethernet switching and transport solutions; Ethernet transport, aggregation and switching technology; multiservice SONET/SDH product families; and network management software products. A The proposed transaction is expected to strengthen Ciena's global presence and bring together complementary technologies in switching and transport that will offer customers a practical path for transitioning to automated, optical Ethernet-based networking.
Ciena is expected to make employment offers to at least 2,000 Nortel employees to become part of Ciena's global team of network specialists. The proposed acquisition would significantly enhance Ciena's existing Canadian-based development resources, making Ottawa the company's largest product and development centre.
Ciena expects to incur integration-related costs of approximately USD180m, the majority of which will be incurred in 2010.
The transaction is expected to be significantly accretive to Ciena's results of operations in fiscal 2011.
As a result of Nortel's restructuring process, the transaction is subject to a competitive bidding process and requires the approval of the US Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice.
Ciena expects hearings before those courts to approve bidding procedures, break-up fee and expense reimbursement will be held within the next several weeks, followed by a bid period and a potential auction, with final sale hearings to be held thereafter.
The transaction is also subject to customary closing conditions, including receipt of necessary regulatory approvals.
Deutsche Bank Securities Inc and Foros Securities LLC served as financial advisors to Ciena on this transaction.
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