Network infrastructure supplier Ciena has won the auction for Nortel's optical networking and carrier Ethernet business with a bid of $769m (£463m).
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The news came after competing bidder Nokia Siemens Networks pulled out of the auction.
Nokia Siemens said it believed its offer was fair and that further bidding "could not be financially justified".
Ciena has forked out $530m in cash and $239m in convertible notes due in mid-2017, and if the deal is approved by the courts, will take ownership of substantially all product platforms, patents and intellectual property, as well as existing customer contracts.
The supplier has also undertaken to re-hire 2,000 Nortel staff globally, which Nortel claims represents more than 85% of the unit's workforce.
Nortel Metro Ethernet Network president Philippe Morin hailed the sale as a "game changing" event for the optical industry.
"Ciena's commitment to the future of our product platforms, customers and employees represents an exceptionally positive outcome to a challenging journey that started over a year ago," he said.
Nortel and Ciena have already obtained antitrust approval in the US and Canada, and full court approval will be sought at a joint hearing scheduled for 2 December. Should everything go to plan, the deal will close in the first quarter of 2010.
A version of this story appeared on MicroScope.co.uk.