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Ciena Bids for Nortel Carrier Ethernet Business

Beleaguered networking vendor Nortel is nearing the final stages of its break-up, with its last major operating division now up for sale and at least one interested bidder.

Maryland based networking vendor Ciena (NASDAQ: CIEN) has put in a bid for Nortel's optical networking and carrier Ethernet assets.

Both Nortel and Ciena are active in the emerging market for 100 gigabit per second networking gear.

The value of the bid is not currently public, though there are some indications. According to at least one report, from the AllAboutNortel blog, Ciena had posted a press release on its Web site pegging the bid at $400 million. The release is no longer live, and Ciena and Nortel would not confirm or deny the value of the bid to InternetNews.com.

Nicole Anderson, Ciena's director of public relations, wrote in an e-mail to InternetNews.com that Ciena would not be providing any additional detail beyond the press release that is currently live on its Web site.

"As it states, we've confirmed that we are in advanced discussions to acquire substantially all of the optical networking and carrier Ethernet assets of Nortel's Metro Ethernet Networks (MEN) business, and that those discussions are uncertain and subject to negotiation of definitive agreements," Anderson said.

Nortel spokesman Bo Gowan told InternetNews.com that while the two companies are in discussions, they have not yet entered into any definitive agreement for the sale of the optical and carrier Ethernet businesses.

"As such, Nortel cannot comment on the potential values or details of any potential agreement with Ciena or other third party," Gowan said.

Gowan added that the optical and carrier Ethernet business units would be sold under a bidding process, as has been the case with Nortel's other business units.

"Any agreement we do enter for these businesses would be subject to a competitive bidding process, also known as a stalking horse," Gowan said.

Nortel has been under bankruptcy protection since January of this year. Through a stalking horse asset sale, other bidders could potentially emerge to outbid Ciena for the wireless assets.

Nortel has already held two similar auctions. One was for its wireless division, where the initial bid came in at $650 million from Nokia Siemens networks. But the final winner of the wireless asset sale was Ericsson, with a bid of $1.13 billion.

In July, Avaya offered an initial bid of $475 million for Nortel's enterprise business unit received. Avaya ultimately acquired the division for $900 million in September.