Ottawa Gives A-O-K to Ericsson Deal

By Mark Evans | Published: September 17, 2009

Like AAN has been saying all along, the Canadian government has given its approval to Ericsson’s $1.3 billion purchase of Nortel’s CDMA business and its LTE R&D unit.

“There are no grounds to believe this transaction could be injurious to Canada’s national security,” Industry Canada Minister Tony Clement said. “[Ericsson] has the resources and customer base necessary to bring Canadian innovation to market…. This deal is very beneficial to Canada.”

Translation: The business and assets that Ericsson purchased aren’t leading-edge and, as a result, there was no way Ottawa could justify blocking the deal.

A more important angle – and one AAN has been hammering away on – is that the stage is now set for Ottawa to step in when Nortel’s LTE patents eventually go on the block. Politically, the Canadian government can claim that the LTE patents are of “national interest” because they will play a crucial role in next-generation wireless networks.

The real possibility that Ottawa could take this stance may scare away potential foreign bidders, which – surprise, surprise – would leave Research in Motion as the logical (Canadian) purchaser.

This is what RIM has been seeking. It didn’t want the CDMA business or the LTE R&D unit; it wants the LTE patents because whoever controls them will have a huge competitive edge. If RIM wants to do LTE R&D, it can hire some of Nortel’s employees, including the 100 talented ones now looking for work.

For more, check out the Globe & Mail.

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  • Pingback: Time is not on Nortel’s side: An appeal to the US, EU, and Cdn Govt’s to expedite the process | TheTelecomBlog.com

  • bankrupt_bob

    The plot thickens.

  • protosphere

    Sold for a billion with a 182M book value but has to be 312M to be eligible to be reviewed.

    This does not make sense so Canada is in the process of introducing new regulations to circumvent this rule.

    When will they look at a National Regulatory body with or without Quebec's opposition than this joke OSC who's head makes 4 times more than the SEC's and is reluctant to put thir pals in jail. No fine for precedent fraud by Nortel yet a precedent fine for RIM to look like they are doing something.

    RIM could have bid, under Nortel's new rules after bankruptcy. No violation there, all legal now like circumventing severances to pay big business creditors.

    When will they stop powerheads like Manley or Greenspan from defending open season on the victims of fraud.

    See readers outrage in comments section to Eddie Greenspan's defense of corporate fraud laws and his powerful clients:
    http://www.theglobeandmail.com/report-on-busine…

    When will adgates, airbusgates, stop as OLG head and the Bill Dunn sue for wrongful dismissal, even revenue Canada employees defraud hundreds of thousands in news today:
    http://www.theglobeandmail.com/news/national/tw…

    The government needs real changes, contrary to what Manley's less regulation and Greenspan's defense of lax laws in Canada for corporate fraud.

    Nortel has circumvented the right thing to do through loopholes with an army of powerful lawyers and corruption at the highest levels. Many still remain with our toothless system unlike our big brother's Dept. of Justice.

    Who knows what we do not know and what remains undiscovered as fraud related news surfaces almost daily in how people steal from Earl Jones, to Madoffs, to name it… with lax enough penalties to make fraud pay in Canada. Nortel sure did before they ran out of money.

    Endless laws need to be reviewed and changed by braver leadership not just book value to real value. What is the intent of the law here. Provincial vs. Federal laws as they relate to severances need to be reviewed too than let unethical companies do what ever they want under loopholes.

    In all fairness, they can not thwart sales to foreign rivals any more than taking back the 407 once found to be profitable. What foreign company would do business with us thereafter.

    Open season on the masses from legalized gambling, bank fees, taxes, etc., to lax laws in book values of $182M, that was in reality a fraction of what it was sold for to another big player. Little guys can just stand and watch to what information is released by these big business theatrics and an army of powerful lawyers.

    Money talks in high places. Would they dismiss the patents RIM wants in favor of another big player in the U.S. who wouldn't be a threat to our National security?

    The ongoing news is a joke until we change our laws to more closely reflect those in the US in regulation and penalty. 182M book value? Who says? Nortel?

  • skeptical2009

    What is happening with NT GSM unit (GU)? Anyone know? Is there hope for them?

  • fishymcdonk

    I do not like this General Tao chicken. Although General Tao himself is a fierce warrior.

  • yes4aapl

    The ongoing news is a joke until we change our laws to more closely reflect those in the US in regulation and penalty. 182M book value? Who says? Nortel?
    =======
    re
    Gov used all the info prepared by army of good layers paid by unlimited $$$ from Nortel's bank.
    How convenient?
    and how predictable?
    I've predicted that since day one.
    and it's true about value
    What book value?
    Nortel's book value after many shifts in books?
    Did anyone bother to check the books?
    btw
    Accepting E// deal is the best solution at this point for all stakeholders.
    I wonder if E// will get EDC $300 mill support or_and tax credits?
    Getting tax credits /in proportion/ would bust some local business. Good for Canada. jmho

  • GoProto

    Nortel's book value after many shifts in books?
    Did anyone bother to check the books?
    ——————————
    re
    This is why it will be nearly impossible to tell if the IRS really has a case, or not. Wouldn't it be really sad if in fact Nortel does not owe back taxes and whopping penalties but are unable to prove it due to re-stating, re-stating, and re-stating?
    Who, especially IRS are gonna trust a company with that kind of reporting, and look what's happened since then with forecasting profit only to tank and nose dive? Saying you are not considering BK, only to turn around and do it, doling out $45 mil in Bonuses on top of it??

  • TongueInCheek

    Wait a minute, haven't you been whining for months that Nortel has ZERO value?

  • LTE_Engineer

    Conservatives made the right decision for a change. Not voting Liberal this election!

  • zeroman

    Government does not get into the books. They probably looked at the audited statements. Book value is probably based on the stock price, physical assets.

  • zeroman

    who would want GSM?

  • zeroman

    also just in. Avaya will have to pay a 200 million penalty if the approval process takes too long. quite a massive committment. could not be purely for sales, channels and customers.

  • GoProto

    Don't they have 7 months to get it done? That's what I remember reading.

  • GoProto

    I think yes4 meant financial statements when referring to “shifts in books”, and how they were re-stated over and over and over.

  • Pingback: Time is not on Nortel’s side: An appeal to the US, EU, and Cdn Govt’s to expedite the process « TheTelecomBlog.com

  • GoProto

    This just in – may spell trouble for PE, including SilverLake's investment ~

    A company owned by the founders of Skype has filed a copyright infringement suit against the Internet phone service and parent eBay Inc. — an action that could crimp eBay's plans to sell Skype for about $2 billion to a group of private investors.

    http://www.comcast.net/articles/finance/2009091…

  • yes4aapl

    What is the purpose of the law ICA?
    I don't think that law should be applied in Nortel's case anyway. Nortel has been BK.
    Any price put on Nortel assets is a gain.
    In other words if there were no buyer the division would be liquidated anyway.
    In Nortel's case it's all about controlled liquidation using Ch11.
    I'm personally glad that not all is lost, that many employees will continue to work.
    NT shareholders were defrauded. So be it. Bondholders are losing the battle. So be it.
    but why we don't see a promise that it should not happen again in the future to other shareholders? I am very concerned about RIMM at this point. Another Big investing gamble and the same environment_culture.
    What is different?
    Nothing will be changed for better if the bad guys are not named and separated.
    BTW
    Thank you GP for support
    by shifting, I meant constant restructuring, shifting assets in the books from division to division causing also restatements as you said.

    Terms, examples
    Defunct Business
    A business which has ceased normal operations and become defunct, as exemplified when the business has permanently closed due to its unprofitability, or has been permanently abandoned or discontinued due to a number of reasons, including depletion of reserves, obsolete plant, machinery, equipment, technological processes or product lines, and the closure did not occur for any purpose related to the Act, is not a “business” as defined in section 3 of the Act, and hence the acquisition of its control would not be subject to the Act. Of course, this determination is a question of fact to be determined by the circumstances of each case.

    Receivership or Bankruptcy
    A business has not gone defunct by reason only that its assets have been placed in the hands of a Trustee in Bankruptcy pursuant to the Bankruptcy Act, or that its assets have been placed in receivership. Provided the Trustee or Receiver is carrying on the operations with a view to disposing of the business as a going concern, or to reorganizing its affairs, it is still considered a “business”. However, where circumstances have degenerated to the extent that the business is incapable of being carried on or of being sold as a going concern, and the Trustee or Receiver takes steps to liquidate the assets on a piecemeal basis, it is no longer considered to be a “business” as defined in the Act.
    And more
    http://www.ic.gc.ca/eic/site/ica-lic.nsf/eng/lk…

  • protosphere

    No, I have argued that rapidly declining units already losing money for years are worth below zero. No earnings- burden they could no longer feed.

    And wait a minute yourself toungeincheeks, haven't I been warning than whining how Nortel would go bankrupt for years while you speculated they wouldn't, feeding us rosy stories all the way to zero for years.

    Haven't I warned the shares would go to zero as you pumped this fraud dog arguing with us.

    I would re-evaluate the merits of forecasting over the years than split hairs on months in the event you are bitter our forecasts transpired. Don't blame us, or the news, it was all this fraud dog's fault, even after our endless substantiated warnings to endless ongoing events… to this very day.

  • less

    And the plop glistens.

  • zeroman

    CPP on the hook. lawsuit is for 75 million a day. whopping huge. if it is 75 million a day these guys must be asking for 1 or 2 billion for a settlement. they originally sold it for 2 billion.

    wow.

  • GoProto

    We'll see. I never try to predict these type of lawsuits. You just never know.

  • zeroman

    agree but seems eBay did not acquire the core software. the agreement still exists so they can pull it out. it will be settled out of court with the amount of money invovled, though the founders will want a lot with users slated to top a billion. they must not have expected popularity to be so high which may be why they held onto the core technology.

    eBay was on track for an IPO. they must have seen this coming hard at them so took the route to offload 65% of Skype at the first opportunity, shifting liability to the investors.

  • zeroman

    hey TIC you sitting on the CDMA bum part of E/// or Enterprise bum part of Avaya. or part of the 100 LTE bums (poor souls) who will be fired.

    you still in the I Believe expecting Nortel to re liquidate and send the stock to 120 a share.

    aw! wherever you imagine swatting time in a year.

  • yes4aapl

    zeroman
    You proved many times your conclusions about Nortel were just perfect.
    i am surprised you don't know who TiC is…

  • GoProto

    An interesting, and I think, quite provocative account of how Siemens lost the ES bid and how actions by various players affected the outcome:

    http://www.theglobeandmail.com/news/technology/…

  • NTInfidel

    Real translation: It's a Conservative government, unless this is military, that could potentially fall into they hands of someone they don't trust (ie anyone), then wouldn't block it no matter what.

    Though I agree, they shouldn't have blocked the sale. RIM complaints were utter nonsense, but they should have engaged in the normal oversight for these sales.

    The Government excuse that they didn't meet some ~$300Million threshold, when it sold for over $1Billion is kind of laughable.

  • bankrupt_bob

    ; > )

  • GoProto

    Less ~ where have you been?

    GP

  • less

    I got a job fixing cell phones… Ironically, perhaps, phones and electronic of any are forbidden there, and Web access monitored by Big Brother (Cisco).

  • GoProto

    Oh, ok. Just wondering where you went to .. good luck to you.. at least you are doing something better than removing lightbulbs from flourescent fixtures at NT .. I think they may auction them off with the furniture and fixtures .. ;>}

  • less

    Metrics, metrics. I gotta make my daily quota and do so flawlessly or I won't last beyond the third trial week.

    Given how much perfectly good $$$ equipment Nortel threw away over the last decade before resorting to removing lightbulbs from flourescent fixtures its actually painful for me to discard any consumables, no matter how small or cheap.

  • GoProto

    Have you heard of the Filmmaker, Michael Moore? That's who makes the most sense to me.. His first film was called Roger and me, about how the GM CEO caused the pain and suffering of not only his family, but the entire town in Michigan he lived in. That was 20 years ago! Closing plants here only to open them in mexico for cheap labor. Some things never change, eh? His other film, Sicko about the Healthcare Industry, Fahrenheit 911 about Bush, and the lies he told, and now his newest film – Capitalism: A Love Affair. You HAVE to see it. It is so funny, BUT so true. IMHO ~ He is not a socialist, not against capitalism, but not for the top 1% getting everything and 95% suffer. He is For: Democracy. Like you and I he believes in not wasting things, he is against greed and fraud in our Corporations..
    Good Luck Less…

  • less

    I did like Roger and Me. I saw it while reading GM worker Ben Hampers “Rivethead” while authoring my own adventures in blue collar work abroad.

    Moore did urge us to vote for Obama so that his admin would tax the rich into financing free health care for all. So, since Mike's now rich I've contacted him repeatedly asking him to give me some free money for my meds, like he'd gifted the owner of (anti-site) Moorewatch with, but so far he's been strangely Roger Smith-ish in answering my request.

    (To this day said owner treats the story like NT UMTS or similar. No need to bring that up anymore, eh)

  • GoProto

    I have seen some of Morre's interviews in the past week. he seems to believe that Obama's “heart” is in the right place, but that he needs to not offer a compromise from the get go to people who never had any intention of working with him (Healthcare reform) In '03 he supported single payer system, now he is willing to let even the public option slide?? No, you make up your mind, and stick to your guns. ; > )

  • GoProto

    I have seen some of Moore's interviews in the past week. he seems to believe that Obama's “heart” is in the right place, but that he needs to not offer a compromise from the get go to people who never had any intention of working with him (Healthcare reform) In '03 he supported single payer system, now he is willing to let even the public option slide?? No, you make up your mind, and stick to your guns. ; > )

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