Times are tough at Nortel... and getting tougher. When the
company started going downhill they sought a way out by selling off
major portions of their product lines, and recently Ericsson was
approved to buy their wireless equipment unit. The process
involved going through both US and Canadian approval to ensure that the
deal made sense. But now, RIM is seeking to put a stop to the
sale by using a few different tactics.
First, they are claiming that the sale is not in the best interest of
Canadians, which have, in the past, had their tax money being invested
in Nortel to help the company grow. Second, RIM claims that
the sale would lead to a national security issue as the company would
not be owned by a Canadian firm, which halted the sale of other
companies in the past. Finally, it is claimed that the sale
needs to be reviewed under the Investment Canada Act.
In response, Nortel and Ericsson are trying to uphold the original
deal, stating the Ericsson has shown good faith to Canadians over the
years and that the asset value is below the threshold for review under
the Investment Canada Act.
There was a special hearing held last Friday (August 7, 2009) to let
the three companies present their cases and the outcome is, as of yet,
I am not sure how I feel about the proceedings and will be watching for
the outcome. On one hand, being a patriotic Canadian and
having a number of friends that have been able to make it through round
after round of layoffs at Nortel, makes me want to have the majority of
the company stay in Canadian hands. But on the other hand, it
seems to me like RIM is acting out of hand. They had the same
opportunities that other firms did, chose not to sign an NDA (although
there are some issues regarding what the NDA required from the signee,
like not being able to bid on other assets for 12 months), and to me it
now feels like they are behaving like a petulant child who did not get
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