01—Abstract
Summary
Summary of the 8-K filed October 7, 2009. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation (CIEN) has announced a significant strategic acquisition on October 7, 2009, entering into definitive agreements to purchase substantially all of the North American, Caribbean, Latin American, and Asian optical networking and carrier Ethernet assets from Nortel Networks Corporation's Metro Ethernet Networks (MEN) business.
This acquisition, along with a parallel agreement for the European, Middle Eastern, and African (EMEA) assets, involves a total consideration of $390 milliona in cash and 10 million shares of Ciena common stock. The acquired assets include a robust portfolio of optical transport, Ethernet switching and transport solutions, and related intellectual property, positioning Ciena to strengthen its market presence in key technology areas.
02—Key points
Key Highlights
- Ciena is acquiring substantially all of Nortel's Metro Ethernet Networks (MEN) optical and carrier Ethernet assets across North America, Latin America, Asia, and EMEA.
- The total purchase price is $390 million in cash, plus 10 million shares of Ciena common stock.
- The acquired assets include long-haul optical transport, metro optical Ethernet solutions, and related intellectual property.
- The transaction is subject to a competitive bidding process under the U.S. Bankruptcy Code and Canadian CCAA, requiring court approvals.
- Ciena expects to hire at least 2,000 Nortel employees as part of the acquisition.
- Integration costs are estimated at approximately $180 million, with most expected in 2010.
- A transition services agreement is planned, with Ciena estimating annual payments of up to $100 million to Nortel for support services for up to 24 months.
03—Questions
Frequently Asked Questions
What is the primary purpose of this 8-K filing?
This 8-K filing announces Ciena Corporation's entry into material definitive agreements to acquire significant optical networking and carrier Ethernet assets from Nortel Networks Corporation. It details the terms of the acquisition, including the purchase price, the assets being acquired, and the conditions that must be met for the transaction to close.
What is the total financial commitment for this acquisition?
The total consideration for the acquisition is $390 million in cash and 10 million shares of Ciena common stock. Ciena also anticipates incurring approximately $180 million in integration-related costs, with additional estimated annual payments of up to $100 million for transition services from Nortel.
Are there any significant risks or uncertainties associated with this deal?
Yes, the acquisition is subject to a competitive bidding process under bankruptcy court approvals in the U.S. and Canada. This means other bidders could submit higher offers, and the transaction's finalization depends on various court approvals, regulatory clearances (e.g., antitrust), and the successful completion of the bidding process by specific deadlines.
What will Ciena gain from this acquisition beyond the physical assets?
Ciena will acquire Nortel's optical networking and carrier Ethernet product lines, including long-haul optical transport, metro optical Ethernet switching and transport solutions, and related network management software. Crucially, the deal also includes the transfer of all patents and intellectual property predominantly used in these optical and carrier Ethernet businesses.
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