Bloomberg News

Apple Gets U.S. Antitrust Approval to Bid for Nortel Assets

June 23, 2011

(Updates with auction process in seventh paragraph.)

June 23 (Bloomberg) -- Apple Inc. got approval from U.S. antitrust regulators to bid for the assets of bankrupt Nortel Networks Corp., according to an agency statement.

The Antitrust Division of the Justice Department reviewed Apple’s request to bid for a number of Nortel patents, according to a person familiar with the situation who declined to be identified because the process isn’t public.

While Cupertino, California-based Apple has won a green light to participate in the bidding, the Antitrust Division will continue to review any anticompetitive issues that could arise if an agreement is reached, the person said.

Nortel, a Canadian phone-equipment maker that filed for bankruptcy in Wilmington, Delaware, in January 2009, agreed to sell about 6,000 patents to Google Inc. for $900 million unless a competitor bids more at a June 27 auction. Nortel, based in Mississauga, Ontario, delayed the auction for a week, citing a “significant level of interest” in a June 16 statement.

“Even though these big companies are under scrutiny by antitrust regulators, they are not routinely being slowed or blocked in their expansive ventures,” said Rebecca Arbogast, a Washington-based analyst with Stifel Nicolaus & Co. “The Nortel auction is a great treasure trove, and this will help companies gain patents for offensive expansion and as a defense against patent suits.”

No Names

Amy Bessette, an Apple spokeswoman, declined to comment.

For the auction to take place, at least one competitor needed to top Google’s bid by at least $29 million by June 13, according to rules approved by U.S. Bankruptcy Judge Kevin Gross. Nortel attorney Lisa Schweitzer declined to say how many, if any, bidders offered to pay more than Google.

The company doesn’t plan to make any information about the bidding public until after it picks a winner, Schweitzer said in an interview this week.

Bidding will take place in the law offices of Nortel’s U.S. law firm, Cleary Gottlieb Steen & Hamilton LLP, where the biggest auctions for Nortel’s assets have been held during the company’s bankruptcy. Some past auctions lasted more than 24 hours, with several rounds of bidding. The sales raised about $3 billion to pay Nortel creditors.

Ericsson AB bought Nortel’s wireless-equipment business in 2009 for $1.13 billion after six rounds of bidding that included Nokia Siemens Networks and MatlinPatterson Global Advisers LLC. Last year, Ciena Corp. acquired Nortel’s optical-networking business for $773.8 million in cash.

Smartphone Technology

The patent portfolio will give the winning bidder rights to control and license technologies including wireless video that may be valuable for future generations of smartphones such as Apple’s iPhone and Research In Motion Ltd.’s BlackBerry.

Software maker Microsoft Corp., computer maker Hewlett- Packard Co. and phone maker Nokia Oyj are among technology companies that objected to the sale to Google, saying in court papers the deal doesn’t guarantee them continued access to technologies they currently have a right to use.

RPX Corp., a San Francisco-based patent-buying firm, is also considering a bid, Andrew Kent, an attorney for the company, said at a bankruptcy court hearing last month.

Bloomberg News reported Apple’s interest in bidding for the patents on June 18, citing two people familiar with the matter. Research In Motion, based in Waterloo, Ontario, and Ericsson are also weighing bids, people familiar with those companies’ plans have said.

The bankruptcy case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--With assistance from Hugo Miller in Toronto and Adam Satariano in San Francisco. Editors: Andrew Dunn, Charles Carter

To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Steven Church in U.S. Bankruptcy Court in Wilmington, Delaware, at schurch@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; John Pickering at jpickering@bloomberg.net.


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