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Ericsson To Acquire Nortel Unit For $65 Million

Cash purchase of Nortel's multi-service switch business will strengthen Ericsson's CDMA innovation, said a company official.

Ericsson said it has entered into an agreement to purchase Nortel Networks' multi-service switch (MSS) business in a move that will complement and strengthen Ericsson's earlier purchase of Nortel's LTE/CDMA unit for $1.13 billion.

The purchase -- for a cash price of $65 million -- is for one of the remaining units of Nortel, which has been operating in bankruptcy protection for nearly two years.

The earlier purchase of Nortel's LTE/CDMA operation established Ericsson as the world's largest LTE/CDMA infrastructure provider.

The new acquisition "is further evidence of our commitment to our CDMA portfolio as we continue to strengthen our in-house R&D and services muscle to deliver on the innovation, collaboration, and support that our customers have come to expect from us," said Rima Qureshi, senior VP and head of Ericsson's CDMA mobile systems business operation.

The MSS switching operation, which includes Nortel's Shasta edge router unit and intellectual property, is part of Nortel's formerly important CDMA ecosystem and includes marketing and support for data networks and switching platforms for core networks. Ericsson noted that MSS provides a multiplicity of services for backbone networks.

Structured as an asset purchase of $65 million on a cash and debt-free basis, the acquisition is subject to regulatory and other adjustments. Relevant bankruptcy courts in Canada and the United States must approve the deal.

Nortel, which once employed more than 8,000, was previously Canada's largest company by stock market valuation. It filed for bankruptcy protection in early 2009 and has sold of most of its units since then.

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