Posted by: Shamus McGillicuddy
Reuters is reporting that private equity firm Gores Group (majority owner of Siemens Enterprise Communications and Enterasys Networks) has formed a joint venture with Siemens AG, called Enterprise Network Holdings, as part of an effort to make a bid for Nortel’s enterprise division.
Nortel recently announced that Avaya had made a stalking horse bid of $475 million for Nortel’s enterprise division, which includes its voice and data networking businesses. As dictated by Canadian and U.S. law, other qualified bidders will have an opportunity to outbid Avaya for the division, probably next month.
Gores Group bought a controlling interest (51%) of Siemens Enterprise Communications from Siemens AG last year and combined the company with one of its other holdings, Enterasys. If Gores and Siemens AG’s joint venture is successful in acquiring the Nortel assets, it would probably assign those assets to Enterasys-Siemens, which covets access to Nortel’s customers.
Reuters also reports that Enterprise Network Holdings and Nortel creditor MattlinPatterson have filed objections to the bidding process for Nortel’s enterprise assets. Enterprise Network Holdings claims Nortel has given Avaya an unfair advantage in the bidding process and is asking the courts to require that Nortel provide qualified bidders all information about the assets up for sale. MatlinPatterson, which made an unsuccessful bid for Nortel’s telecom wireless infrastructure business last week, claims that the procedures for Nortel’s auction of its enterprise division fails to preserve its creditors’ right to propose a plan of reorganization as a qualified bid. In other words, MattlinPatterson would rather take control of Nortel than get pennies on the dollar for the Nortel debt it owns.