Ciena shares rise as its Nortel bid challenged

NEW YORK (Reuters) - Shares of network equipment maker Ciena Corp (CIEN.O: Quote) rose 5.3 percent after its bid for Nortel's optical networking and carrier ethernet business was challenged by Nokia Siemens Networks.

Ciena in November trumped an offer by NSN and its financial partner, One Equity Partners, with an offer of $530 million in cash and $239 million in debt for part of bankrupt Nortel's business, but the move had worried investors.

Analysts have said Ciena may have trouble integrating the Nortel assets, which are expected to double Ciena's size, and coping with an increased debt load.

Ciena shares rose to $12.93 on the Nasdaq around midday. As of Tuesday's close, they had fallen some 6.8 percent from before the auction.

NSN, a 50-50 joint venture of Nokia (NOK1V.HE: Quote) and Siemens (SIEGn.DE: Quote), said on Tuesday it will object in U.S. bankruptcy court to Ciena's $769 million bid, and was ready to raise its offer to $810 million in cash.

NSN had teamed up with private equity firm One Equity and put in a final bid of $770 million, but Nortel chose Ciena.

The U.S. Bankruptcy Court for the District of Delaware will decide whether to approve the Ciena-Nortel deal on Wednesday.

Under their agreement, Nortel would have to pay Ciena about $21 million in breakup fees and expense reimbursements if it chooses another buyer.

The case is Nortel Networks Inc, et al, No. 09-10138 (KG) in the U.S. Bankruptcy Court for the District of Delaware.

(Reporting by Ritsuko Ando, editing by Matthew Lewis)