9.Acquisitions and divestitures Acquisitions
Northern Telecom France
On June 24, 2003, Nortel Networks S.A. acquired the outstanding shares of Northern Telecom France from NNI for a purchase price of 83,800 in cash. The purchase price has been presented as a decrease of 83,800 in the additional
purchase price relating to the interest acquired from NNIF&H B.V. has been€presented as a decrease of 31,017 in additional
as Northern Telecom France has already been included in the financial statement presentation for all periods (see note 2). Northern Telecom France is a holding company that was then holding interests of 17.8% in Nortel Networks France and 13.2% in EADS Telecom.
Nortel Networks France
On October 19, 2002, Nortel Networks S.A., and certain other subsidiaries of Nortel Networks, entered into a number of conditional put option and call option agreements as well as a share exchange agreement with European Aeronautic Defence and Space Company EADS N.V. (“EADS”), Nortel Networks partner at that time in three European joint ventures. On July 1, 2003, EADS exercised its put option to sell its minority interest of 45 percent in Nortel Networks France to Nortel Networks S.A., which then immediately exercised its put option to sell this interest to Nortel Networks. The transactions were completed on September 18, 2003. As a result, the put option liability to EADS and the put option asset from Nortel Networks, both in the amount of 77,500, were removed from the balance sheet of Nortel Networks S.A. as of that date.
On December 18, 2003, Nortel Networks S.A. acquired the remaining interest in Nortel Networks France from Nortel Networks and
NNIF&H B.V. for a purchase price of 39,375 (including 34,460 in cash) and 31,017 respectively. The acquisition of the remaining interest in the net assets of Nortel Networks France was recorded using their historical costs as recorded by Nortel Networks and
capital of Nortel Networks S.A. as this€interest in Nortel Networks€France has already€been included in the financial statement presentation for all periods (see note 2).
NNIF&H B.V. The interest acquired from Nortel Networks was recorded in the accompanying financial statements on September 18, 2003, the date the interest was acquired by Nortel Networks from EADS. This acquisition resulted in a reduction of minority interest of
10,512 and recording of 9,180 related primarily to customer contracts and customer relationships (“customer related intangibles”) and 19,683 of goodwill. The customer related intangibles will be amortized over their estimated useful lives averaging nine years. The
On July 18, 2003, Nortel Networks and its subsidiaries exercised the call option and share exchange rights to acquire the minority interest held by EADS of 42 percent in Nortel Networks Germany GmbH & Co. KG (“NNG”) and to sell Nortel Networks equity interest of
41 percent in EADS Telecom to EADS. These transactions were completed on September 18, 2003 along with the purchase of Nortel
Networks France. Nortel Networks S.A. held an aggregate interest in EADS Telecom of 15 percent or 259,969 shares as of that date. | |
During that period, Nortel Networks S.A. sold 215,170 shares of EADS Telecom to NNIF&H€ | B.V. for 48,783. The resulting gain from |
this related party transaction of 35,648 has been recorded as additional
On May 29, 2001, Nortel Networks France contributed certain of its enterprise activities to EADS Telecom in exchange for shares of EADS Telecom. The activities that were contributed were assessed to be approximately 8 percent of the value of Nortel Networks France
before the contribution. The fair value of the net assets contributed to EADS Telecom was estimated to be 73,480. The contribution | |
included the full ownership€of five foreign subsidiaries of Nortel Networks France. The contribution was effective as of May 1, 2001. A | |
gain of 14,262 was recorded on that transaction. | € |
Subsequent to the contribution, Nortel Networks France transferred the shares received from EADS Telecom in consideration for the contribution to its shareholders as an
Matra Nortel Communication Distribution
On September 30, 2001, Nortel Networks France sold 80.1% of its participation in its subsidiary, Matra Nortel Communication
Distribution S.A.S. (“MNCD”), to third parties for 30,032 in cash. Cash has been collected in 2002 and 2001, respectively for 9,909 | |||
and 20,123. MNCD was the main distribution channel of Nortel Networks France and EADS Telecom in France. A gain of 16,240 was | |||
recorded on that transaction. |
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Following the sale of MNCD, Nortel Networks France subscribed on December 10, 2002 for 249,000 common shares of SPIE | |||
Communication (formerly MNCD) at par for an amount of 2,490. The additional subscription represented€ | 15.33 percent of the share | ||
capital of SPIE Communication.€199,449 of the new shares of SPIE Communication subscribed by Nortel Networks France representing | |||
12.28 percent of the share capital of SPIE€ | Communication were sold on the same day to third parties for nil. A loss of 1,995 was | ||
recorded on that transaction. Nortel Networks€ | France had entered into the transaction as part of the commitment taken in favour of the | ||
purchasers of MNCD (see note 13). |
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The remaining 3.05 percent interest of Nortel Networks France in SPIE Communication was sold on June 30, 2003 to third parties for an | |||||||||
amount of 915 in cash. A gain of | 610 was recorded on that transaction. |
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Nortel Networks€ | France also granted in the year ended December 31, 2002 a loan amounting to | 9,146 to SPIE Communication. The | |||||||
loan€was refunded€ | in the year ended€ | December 31, €2003. | € | 212 | € |
| € | €€ | |
