Nortel’s Takeover Prospects?

The Toronto Star has a short story looking at possible takeover candidates within corporate Canada. Not surprisingly, Nortel makes the list. Here’s the Star’s take: Post-telecom bust, the telecom-equipment sector is consolidating. Weak sister Nortel matches up nicely as a North America partner to European peers Telefon AB L.M. Ericsson of Sweden, Germany’s Siemens AG and Alcatel SA of France”. Thoughts?

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6 Responses to “Nortel’s Takeover Prospects?”

  1. Leave a Reply Says:

    My thoughts are *Yawn*. This has been an ongoing topic for over a year now, although I’m not sure why. Mike Z has come out and said it’s NOT going to happen, so what higher source are people looking for before they realise this won’t happen?

  2. Alain M Says:

    I think Nortel is “hands-off” for all of 2007. It seems like Mike really wants to give Nortel his 100%. I say, let’s give hime more time to clean house and install 6-sigma. Are shares will be worth a bit more this way.

  3. Observer Says:

    They couldn’t even partner to date with any “substantial returns” or partner with Huawei or Force 10 more recently let alone be acquired by anyone.

    Rumour has run rampant for years, simple truth is no one wants Nortel, not even large customers. Look at their liabilities vs. profit and outlook, Just what kind of white elephant would they’d be buying, Nortel would have to pay the acquirer with their no miracles/easy fixes, and rocky road tall mountains losing money.

    Why didn’t anyone buy it when it was cheaper, trading at 43 cents with less woes? Why didn’t the brokers burning the midnight oil arrange a hostile takeover right after scandal broke out?

    I remember when Chambers of Cisco was pressed to answer a few years ago during Nortel’s endless delays in silence (for a restated restatement that was further restated) when he finally indicated he didn’t even want a part of Nortel, not a part of it, and besides he said large acquisitions don’t work (albeit Cisco acquired Scientific Atlanta), or worried about overlapping areas. He was polite for a company who use to spit at each other behind closed doors. Note that Nortel slandered ex-Cisco Gary when he suddenly quit pessimistically, and later went on to replace Owens with Mikey a green CEO to announce/downplay more dramatic revisions.

    Credibility is also reiterated as a pressing issue when it comes to being acquired. What will they be buying? Even their extended repair of numbers remain unreliable, and they have so many more unknown to come in like fines, criminal results, evidence from derivative class action, debt, etc… it is endless.

    I don’t know about Ericsson but Alcatel already bought Lucent and Nortel’s UMTS, what more could they want from them. They even rumoured a Seimens takeover, or Motorola as their last dance partner who may not be pleased with how their CEO honoured contracts.

    They are as attractive as a buyout as they are to any large orders. Last one was BSNL years ago that lost hundreds of millions. No one wants anything to do with NT who cut product after having no product for BT’s $19B tender. Even future aspirations are bought elswhere as can be seen by Sprint. Perception is poor.

    To top it off, our government has made it harder for foreign take overs:

    http://www.theglobeandmail.com/servlet/story/RTGAM.20061125.wxchina-canada25/BNStory/National/home

    “Posted AT 12:53 AM EST ON 25/11/06

    Ottawa red flags foreign buyouts- STEVE CHASE and BRIAN LAGHI- From Saturday’s Globe and Mail

    The Conservative government is floating plans to block takeovers and investment from foreign state-owned firms should it detect a threat to Canada in the transaction, a move triggered by China’s global prowl for acquisitions.

    The policy emerged quietly this week in the new economic plan unveiled by Finance Minister Jim Flaherty…”

    There may be other reasons not apparent to the public eye why a take over is out of the question, albeit it is probably the only thing that can save this fallen icon and yester year darling headed to be gone tomorow at this rate and point having exhausting assets and printing so much just to keep afloat as it still loses money in its death spiral any cuts may not save.

    Most companies that near insolvency eventually do fold shortly thereafter, even if seemingly doing well, let alone with Nortel’s mountain of woes. Another reason I feel it is inevitable this time around.

    Perhaps others are holding off to acquire Nortel even cheaper from the trustee’s auction after Chapter 11/ Bankcruptcy, even if there was any interest =)

    Acquired? in a word? I say, horsefeathers.

  4. codoc Says:

    While Nortel is a theoretically good match, Mike Z is not going to give up his CEO seat to merge with another company. And the other company is very unlikely to make Mike Z CEO of the merged company. The board is also unlikely to make a move. My prediction is that the current mergers must play out, then Nortel might consider doing something.

  5. Ryan Says:

    In a sector that is seeing consolidation all over the place, it is somewhat surprising that Nortel is not in the news more frequently for this type of thing. However since Zafirovski made it clear that he will not allow the company to enter into any merger or consolidation at this point, I think the TO Star listing Nortel as a possible take-over target is a waste. In its quest to gain market share it would seem logical that Nortel would enter into a merger that would allow it to excel, but the execs do not want that. So I am left to wonder several things….Is Nortel in a position to compete in a sector that is heavy with consolidation? Is Nortel is such bad financial shape that a consolidation would be nothing more than a hostile takeover? Or is Nortel so focused and realistic about their future that they don’t feel they need help? I am not sure which possibility is correct, and until I know clearly why the execs are not scoping out consolidations, I will not feel comfortable with it.

  6. AnonC Says:

    A related hypothetical question would be “If not a voluntary sale, would a hostile takeover of Nortel be possible”?

    In a few days, the reverse split will happen and reduce the number of shares by 90%. If someone tried to buy control, how likely would Nortel be to massively dilute the number of shares again to maintain control.

    Mike Z and management do not willingly want to sell out, but they might not have a choice. I can’t say that a scenario like this would be good or bad for Nortel or the shareholders.

    A successful hostile takeover could result in the winner breaking up Nortel to sell off the best bits to other companies, and pitch the rest. A failed takeover attempt might either revive interest in Nortel or deliver another blow to confidence in Nortel.

    But in any case, if current NT management are not able to generate positive results shortly they might have to deal with the distraction of a hostile takeover from a position of weakness.

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