Nortel gets green light to sell enterprise business

Nortel has received U.S. and Canadian court approval to sell its enterprise business to Avaya or at auction on Sept. 11.

According to a story in Reuters, Nortel received the go ahead yesterday. Nortel confirmed the report.

Avaya has offered $475 million for the business, setting a floor for auction in five weeks.

Bids from other interested parties are due Sept. 4, according to the report.

Bankrupt Nortel said it would liquidate its assets rather than try to remain intact as it reorganizes under Chapter 11. Ericsson just won the company’s CDMA and LTE wireless business for $1.13 billion.

Nortel filed for bankruptcy in January. The company has since been losing orders and customers due to its precarious financial situation and the overall global economic downturn.

If Avaya’s offer is accepted, the company would gain about 10 percentage points in enterprise telephony revenue market share, further extending its lead on No. 2 vendor Cisco, according to data from Dell’Oro Group. Competition from Cisco was cited by Nortel as a reason for selling the business, according to the Reuters report.

Nortel’s Enterprise Solutions group employs about 7,800 people.

Any buyer of the business would be free to retain or terminate existing customer contracts, according to the Reuters story.

The buyer would obtain Nortel’s routers, switches and enterprise VoIP equipment and applications, as well as integrator Nortel Government Solutions and DiamondWare Ltd., which makes softphones.

Meanwhile, the sale of Nortel’s wireless business to Sweden’s Ericsson, and the break-up of Nortel overall, will come under scrutiny tomorrow with the House of Commons Industry Committee holds emergency hearings on the dismantling of Nortel. Representatives from Nortel, Ericsson, Research in Motion and Industry Canada are expected to attend.

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