RIM Losing Bid To Stop Nortel-Ericsson Deal - InformationWeek
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8/13/2009
02:44 PM
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RIM Losing Bid To Stop Nortel-Ericsson Deal

Canadian Prime Minister Stephen Harper says he won't block Ericsson's $1.13 billion purchase of Nortel's LTE and CDMA unit.

Research In Motion's plea to the Canadian government to block Ericsson's $1.13 billion purchase of Nortel's prized LTE and CDMA unit appears to be fading with reports that Prime Minister Stephen Harper won't block the deal.

"There's a process, a process of review of purchases by foreign companies," Harper told reporters Wednesday. "And we will respect this process." Harper has been promoting free trade and an attempt to inject government policies into the Nortel-Ericsson deal would run counter to his business and political philosophy.

However, RIM, which has urged the government to intervene in the Ericsson-Nortel deal, found something to like in Harper's comments. "The Prime Minister has acted in a way that could facilitate an outcome that serves the interests of all parties and of Canada," RIM said in a statement. RIM and Nortel are both headquartered in Ontario and RIM has argued that government intervention in Ericsson's takeover of the Nortel assets would be in the best interests of Canada.

Ericsson, headquartered in Sweden, has countered that it won the Nortel assets fair and square in an auction and that it has a sizable operation in Canada.

RIM, the maker of the popular BlackBerry family of mobile phones, has expressed an interest in the intellectual property surrounding LTE, which is on the verge of becoming a major global player in 4G. Ericsson has recently been concentrating on developing LTE infrastructure.

Nortel, which has been in bankruptcy proceedings since January, said RIM couldn't bid for the CDMA/LTE unit because RIM didn't comply with bankruptcy court proceedings.

There is still time for RIM to possibly influence the sale of Nortel's LTE/CDMA assets. A time deadline to appeal the Nortel-Ericsson deal hasn't yet expired. In addition, Canada's Industry Minister, Tony Clement, has indicated the deal could still be reviewed by the Canadian government.

Nortel, which once had a market valuation of nearly $300 billion, has been in bankruptcy proceedings since January. Its former CEO, Mike Zafirovski, resigned this week after Nortel reported it lost $274 million in its latest quarter.


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