So far, the bankruptcy court proceedings for auctioning off Nortel’s assets have been lacking some good old-fashioned courtroom drama for us in the peanut gallery.
Competitor A puts in bid, Competitor B drives it up, someone wins, courts say OK, everyone goes home and puts out press release promising this is a great fit and the merger will be nice and smooth.
Paging Jack McCoy! Please breathe some life into this!
Until this week, the auction for Nortel’s optical and carrier Ethernet business, Metro Ethernet Networks, seemed to be following the usual script. United States and Canadian bankruptcy courts were moments away from approving the $769 million bid for one of the most prized jewels in the fallen Canadian vendor’s crown. The deal would be $530 million in cash plus $239 million in convertible notes, due 2017.
Enter Nokia Siemens Networks, which along with its private equity partner, One Equity Partners, had driven up the bidding while it was still on the chopping block.
But apparently Nokia was hemming and hawing for a week over how badly they really wanted the assets. After declining to top Ciena’s bid more than a week ago, Nokia Siemens decided Tuesday it could pay Nortel $810 million in cold, hard cash, as Reuters reported.
That set up Wednesday’s fight in court, with Nokia Siemens and some creditors arguing the auction should be reopened, in part because Ciena’s convertible securities were overvalued.
After roughly seven hours of argument, testimony and cross-examination, Nortel’s attorney said his team had a reached a deal in the hallway outside the court that would lead to the withdrawal of the last major objection.
Judges in Delaware and Ontario accepted the Ciena/Nortel deal and “declined to hold up the acquisition,” the Associated Press reported.
Guess money doesn’t always talk.