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Who Could Buy Nortel?
By Mark Evans | March 25, 2006
In the wake of the Alcatel-Lucent mega-deal, there's lots of speculation on who could buy Nortel. Desjardins Securities analyst Paul Howbold stepped up with five candiates, the top one being Ericsson. Here's how he maps out the contenders:
Ericsson. Re-enter the CDMA market, gain further scale in wireline technologies to boost IMS/FMC, CEO has a history of completing multiple acquisitions. However, Ericsson has no interest in the Enterprise division (although it could be sold) and recently acquired Marconi fixed line assets. There also could be some anti-trust concern regarding the merged company's share of the UMTS market within Europe. Nonetheless, we consider Ericsson the most likely bidder.
Nokia. Broadly similar reasons to Ericsson, although the company is more focused on its handset business.
Siemens. The directly analogous move to Alcatel/Lucent, there would be substantial synergies from combining the wireless businesses of the two companies (in UMTS and GSM), as well as possible R&D savings in the Enterprise business (which would span North America, the UK and continental Europe). However, Siemens has considered divesting its communications division, and previous talks with Nortel broke down.
Motorola. Substantial synergies would be available by combining the UMTS/GSM and CDMA business lines, as well as wireline and WiMax offerings. The deal would also avoid the substantial cultural differences of a cross-continental deal. However, we note that as with Nokia, Motorola is more focused on its handset business.
Cisco. Although Cisco would like to enter the wireless market, we remain sceptical that it would like to take on Nortel's legacy businesses (possibly reducing Cisco's trading multiple). We also believe that Cisco remains focused on integrating the Scientific-Atlanta acquisition.
Update: There are also some analysts talking about a deal between Ericsson and Juniper.
Topics: M&A |