Chinese equipment vendor Huawei is understood to be interested in acquiring Nortel’s stake in LG-Nortel, the Canadian vendor’s South Korean joint-venture with LG Electronics. A Trading Markets report linking Huawei with the business cites unnamed sources, though neither Huawei nor Nortel have commented on the story. LG-Nortel – in which Nortel owns a majority stake (50 percent + 1 share) – is considered one of the most attractive elements in Nortel’s portfolio. In a statement last week confirming that it was looking to sell its stake in the business, Nortel noted that “LG-Nortel is a profitable, standalone business with a strong balance sheet, and has not filed for creditor protection.” The business achieved a management operating margin of US$341 million, or 27 percent, in 2008, and 26 percent in the first quarter of 2009. Goldman Sachs has been hired to find a buyer.
Nortel filed for bankruptcy protection in January 2009 and, although the company is planning to emerge from bankruptcy protection at some point this year, it may still be broken apart if suitable buyers are found for its assets. Nokia Siemens Networks and Avaya have been linked to potential purchases of its mobile and enterprise assets, respectively. However, the sale of its stake in LG-Nortel would need the approval of both LG and the Canadian courts.