Flextronics withdraws objections to Nortel asset sale

Tue Jul 28, 2009 10:54am EDT
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TORONTO (Reuters) - Flextronics International Ltd said on Tuesday it has withdrawn all objections to the sale of Nortel's wireless technology assets to Ericsson and resolved outstanding issues with the Swedish telecom equipment maker.

Ericsson this weekend won an auction for Nortel's key CDMA and next-generation LTE wireless technologies, which Nortel put on the block after it filed for creditor protection in January.

Flextronics, Nortel's largest supplier, had objected to the proposed sale of the assets to Nokia Siemens Networks -- the original stalking horse bidder for the assets, citing concerns that the sale might affect its contractual rights and claims.

CDMA, or code division multiple access, is the North American wireless technology that lost the battle for global dominance but still has a strong position in some markets. LTE (long term evolution) is a new high-speed wireless technology that is intended to replace current mobile networks.

Flextronics said it will support the proposed sale of the assets to Ericsson in U.S. and Canadian courts, according to a filing in U.S. Bankruptcy Court in Delaware.

Flextronics said that Ericsson will pay it $8 million for some of the obligations due under agreements with Nortel.

The two companies will negotiate a new agreement, once Ericsson completes its acquisition of the Nortel assets.

Ericsson edged out Nokia Siemens and private equity firm MatlinPatterson to win the Nortel assets for $1.13 billion. Nokia Siemens was the runner-up with a bid of $1.03 billion and is the alternate if the Ericsson-Nortel deal falls apart.

Flextronics said it reserves all rights and objections with respect to an alternate sale to Nokia Siemens.   Continued...

<p>A sign is pictured outside Nortel's Carling Campus in Ottawa July 24, 2009. REUTERS/Chris Wattie</p>