RIM says Nortel blocked It from bidding on assets
Research In Motion Ltd., maker of the BlackBerry phone, said Nortel Network Corp. blocked it from bidding on Nortel assets up for sale by imposing restrictions it didn't accept.
RIM has operations in Rolling Meadows.
Nortel and its bankruptcy advisers wanted Research In Motion to agree not to bid for any other Nortel assets for one year as a condition to take part in the July 24 auction, RIM said yesterday in a statement. Waterloo, Ontario-based RIM said Nortel knew RIM wanted to purchase other assets.
RIM sought some of Nortel's businesses after that company, once North America's biggest telephone equipment maker, filed for bankruptcy protection in January after posting almost $7 billion of losses in two years. Last month, Nokia Siemens Networks agreed to pay $650 million for Nortel's wireless unit, which supplies phone systems based on a technology called code division multiple access, or CDMA.
"RIM is extremely disappointed," co-Chief Executive Officer Jim Balsillie said in a statement yesterday. "RIM remains extremely interested in acquiring Nortel assets through a Canadian ownership solution."
RIM had been prepared to pay about $1.1 billion for the wireless business and other assets subject to further due diligence of the unit, the company said.
The bid "appears consistent with RIM's larger strategy to build a strong intellectual property portfolio to defend against potential threats" and reduce technology licensing costs, said Mike Abramsky, an analyst with RBC Dominion Securities Inc. in Toronto. He has an "outperform" rating on RIM shares.
Failure to Comply
Nortel, based in Toronto, said in a statement that RIM didn't submit a written application to be a qualified bidder until July 15, two weeks after the courts set bidding procedures for the auction. Nortel tried to negotiate a non-disclosure agreement with RIM on Nortel's intellectual property assets, "but RIM refused to comply with the court-approved procedures," the company said in the statement.
"It's inappropriate for RIM to make any statement regarding stipulations of a bid when they have yet to become a qualified bidder," Jay Barta, a spokesmen for Nortel, said today, referring to RIM's claims of a one-year bidding restriction.
Nokia Siemens' offer is the lead bid in an auction set to take place July 24. Nortel said yesterday it reached a similar agreement to sell its corporate networking unit to Avaya Inc. for $475 million as part of an auction set for later this quarter.
While buying the wireless unit might help RIM shape future technology standards, it is "difficult to understand why RIM would want to enter the infrastructure market given its lack of scale and experience as well as lower industry margin structure," Maynard Um, an UBG AG analyst in New York, said today in a report. He advises clients to buy RIM stock.
Research In Motion fell 93 cents, or 1.2 percent, to $74.04 at 11:26 a.m. New York time in Nasdaq Stock Market trading. The stock had gained 85 percent this year before today.