RIM likely out of running on Nortel auction

Thu Jul 23, 2009 7:46pm EDT
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By Pav Jordan

TORONTO (Reuters) - The chances that Research in Motion will enter a formal bid for the wireless assets of bankrupt Nortel Networks are slim as a bidding war develops for technology coveted by the world's leading telecom-equipment makers.

Nortel's CDMA and LTE wireless technology business goes up for auction on Friday, and at least three bids, ranging from $650 million through $730 million, are on the table. A winning bid for the assets, which may lead mobile technology into the next generation, could emerge almost immediately, barring any objections that the bankruptcy court decides to entertain.

Waterloo, Ontario-based RIM, maker of the popular BlackBerry smartphones, is the most likely party to cry foul, but any protest it may make would come too late to stop the process, analysts say.

The company said this week that Nortel had effectively blocked it from submitting a bid worth $1.1 billion, more than 50 percent higher than the next closest competitor, by imposing unreasonable conditions.

"I'm not sure that the courts will allow RIM back in. I think the probability is very low," said Peter Misek, a Toronto-based analyst with Canaccord Adams.

"Once you get a creditors' committee and you get all stakeholders agreeing (on an) auction process ... to extract the most value, then breaking that auction process or making exceptions ... is a detriment to bondholders and to stakeholders," he said.

Nortel says it applied the same conditions to all bids, which were due by Tuesday afternoon, including confidentiality agreements and a condition that the winner not bid for other Nortel assets for a year without the company's consent.

RIM can object to the auction process and results at a hearing on July 28, but experts doubt objections will prevail.   Continued...

<p>Jim Balsillie, co-chief executive of Research In Motion (RIM), speaks during a news conference to launch the new "Blackberry Bold" handset in Mumbai September 18, 2008. REUTERS/Punit Paranjpe</p>