Ericsson AB, the worldâ€™s largest maker of wireless phone networks, will buy the wireless equipment unit of insolvent Nortel Networks Corp. for $1.13 billion after beating bids from Nokia Siemens Networks and MatlinPatterson Global Advisers LLC.
Source: Bloomberg. com
Keys: Asset acquisition, bankruptcy, valuation, planning
Questions for discussion:
- Why would Ericsson buy these assets from Nortelâ€™s bankruptcy auction instead of developing them on their own?
- At what point in the business cycle should firms anticipate bargain sales of assets? Explain why this is the case.
- How should financial managers plan for this phase of the business cycle?