Nortel and Ericsson... and RIM

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, undecided.

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 their way.