This economy is providing a great deal of opportunity for companies looking to acquire technology and profitable ventures that add to the books. Nortel is a company that has been in financial dire straits for years, and they are having a bankruptcy auction on July 24th, 2009, where RIM has been barred from making bids.
Nortel’s CDMA and Long Term Evolution Access businesses are up for auction, but RIM has been told it could be qualified for bidding only if it promised not to submit offers for other Nortel assets for a period of one year. In seeking to impose this condition, Nortel and its advisors were fully aware of RIM’s desire to purchase other Nortel assets as part of a solution to retain key portions of Nortel’s business under Canadian ownership. Despite repeated efforts, Nortel, its advisors and its court-appointed monitor have rejected RIM’s repeated attempts to engage in meaningful discussions.
A preliminary review, reveals RIM would be prepared to pay in the range of US $1.1 billion for the assets. This is a great deal for Nortel, which could use the cash, and it’s a great deal for RIM, which could use the CDMA and LTE technology to improve BlackBerry devices and infrastructure.
Jim Balsillie said “RIM is extremely disappointed that Nortel’s world leading technology, the development of which has been funded in part by Canadian taxpayers, seems destined to leave Canada and that Canada’s own Export Development Corporation is preparing to help by lending $300 million to another bidder. RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution that would serve the dual purpose of keeping key wireless technologies in Canada and extending RIM’s leadership in the research, development and distribution of leading edge wireless solutions, but RIM has found itself blocked at every turn.”
Nortel is a failing company while RIM is both profitable and a source of Canadian patriotism. At this point, we should consider government intervention to move this deal ahead.