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RIM accuses Nortel of blocking acquisition bids

updated 11:55 pm EDT, Mon July 20, 2009

Nortel blocking RIM bids?

Research In Motion on Monday publicly accused Nortel of effectively blocking acquisition bids through technicalities placed on the terms. Nortel is in the process of offloading a number of its product divisions following financial troubles, while RIM is allegedly willing to pay approximately $1.1 billion for the CDMA and Long Term Evolution Access businesses, along with "certain other Nortel assets."

"Despite repeated efforts, Nortel, its advisors and its court-appointed monitor have rejected RIM's repeated attempts to engage in meaningful discussions," RIM said in a statement. The company also disagrees with allowing the businesses to be sold to buyers outside of Canada, which it believes "may significantly, adversely affect national interests, with potential national security implications."

The issues allegedly involve terms of the acquisition that would prevent RIM from pursuing further purchases of Nortel assets in the near future. The BlackBerry maker was told it could not submit any other bids for a period of a year if it desires to go forward with the $1.1 billion offer.

Several analysts believe there may be more to the story, as it would be unusual for RIM to target just the wireless infrastructure divisions. "It doesn't make a lick of sense for RIM to buy this business from a product point of view ... but they need IP," Charter Equity analyst Ed Snyder told Reuters. "They're getting killed on 3G and GSM because they didn't invent any of this, so they're a net payer of IP to everybody else."

"Other parties moved expeditiously to comply with the court approved procedures to become a qualified bidder," said Nortel. "It was not until July 15, 2009, that RIM submitted a letter to Nortel asking to be a qualified bidder and since that time, Nortel has diligently attempted to work with RIM on acceptable confidentiality terms relating to Nortel's valuable intellectual property assets, but RIM refused to comply with the court approved procedures."

Both companies have a strong presence in Canada, with RIM based in Waterloo, Ontario and Nortel headquartered a short distance away in Toronto. Despite Nortel's enormous market cap in the late '90s, reaching nearly $400 billion, the company was unable to reverse the following downward trend that eventually led to a bankruptcy protection filing in January. RIM has taken advantage of the ballooning market for smartphones, although it still faces stiff competition from devices such as the iPhone.

The CDMA and LTE technology is on track to be purchased by Nokia Siemens Networks for $650 million. Other parties must submit their bids by Tuesday, although Nokia Siemens established a 'stalking horse' bid that automatically allows the company to beat a competing offer by paying an extra $5 million.



By Electronista Staff
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