Nortel auction draws new bidders

A number of buyers want Nortel Network's enterprise unit, necessitating a live auction for those assets on Sept. 11, Nortel said.

Avaya Inc. had been the only outstanding bid for the unit, offering $475 million US back in July, in a process that was set to close on Sept. 4.

But, Nortel said it has now received other bids for its unit which supplies communication services to companies.

"We have received additional bids, but I can't tell you how many, and I can't go into any details on them," said  Nortel spokesman Jay Barta. 

As a result, the various bidders will engage in a live auction to determine a final winner for the Nortel assets.

Earlier in the week, Mark Evans, a longtime technology watcher who writes the All About Nortel blog, had predicted another bidder for the enterprise unit would come forward.

He said a joint venture between Siemens AG, a German telecommunications equipment maker, and Gores Group, a U.S. private equity firm, were set to jump into the scramble for Nortel's enterprise unit, a division that establishes communication services at the company level.

Siemens and Gores formed a partnership back in July with an eye to buying the Nortel division which posted $2.8 billion US in revenue in 2008.

Matlin Paterson, another U.S. private investment firm, was rumoured to be looking at the Nortel unit as well.

Nortel, which is operating under creditor protection, has been selling off divisions as the once-shining star of Canada's technology sector breaks itself up.

Ericsson purchased Nortel's CDMA business for $1.13 billion back in July.

In July, Nortel began a so-called "stalking horse" auction in which Avaya made its initial bid for the enterprise business, with the understanding that other bidders could enter the process up to a certain date.

This type of auction can increase the number of bidders who might be waiting for the company's fortunes to deteriorate further before laying out an offer.