November 25, 2009, 9:37 AM —
The Swedish telecom equipment manufacturer announced Friday the transaction, which will give Ericsson Nortel's Code Division Multiple Access (CDMA) cellular base station business in North America and Long Term Evolution (LTE) wireless technology, has closed.
As of Friday, about 900 Nortel workers are joining Ericsson Canada. About 1,600 additional Nortel employees are now working for Ericsson in the U.S.
The deal resulted from Ericsson winning an auction last summer, which prompted a backlash from politicians -- including Ontario Liberal Finance Minister Dwight Duncan - who claimed Ericsson would move jobs offshore. It was also opposed by the Canadian BlackBerry maker, Research in Motion Inc., which earlier wanted to buy Nortel's Long Term Evolution (LTE) wireless patents.
The other two bidders were Nokia Siemens Networks (NSN) and MatlinPatterson, a New York buyer of distressed companies. No Canadian firms placed bids.
Toronto-based Nortel, which has lost money nearly every year since 1998,filed for protection from creditors in bankruptcy courts last January. In June Nortel said it plans to sell "substantially all" its business assets, after NSN offered to buy the assets that are now in Ericsson's hands for US$650 million.
Ericsson already has a research centre in Montreal, Canada, which includes a customer support centre for customers worldwide. With the Nortel buy, Ericsson will inherit contracts with Vancouver-based Telus Corp., Bell Canada Enterprises Inc., Verizon Communications Inc., Sprint Nextel Corp., United States Cellular Corp. and Leap Wireless International Inc.
During testimony before the Canadian House of Commons Standing Committee on Industry, Science and Technology in August, Ericsson Canada president Mark Henderson said his firm has 1,900 employees in Canada, including 1,500 in Montreal.
At the time, it planned to offer jobs to 800 Nortel employees in Canada, about 550 of whom would work in the nation's capital city of Ottawa. This was the number Henderson gave during his testimony in August, in a reply to a question from committee member Robert Bouchard, a Member of Parliament for the separatist Bloc Quebecois party.