Gaon: Nortel To Acquire 20% of Telrad Shares By End of October

The Canadian company will conduct a propriety check for Telrad Telecommunication & Electronic Industries before it finally decides whether to acquire the shares for $45 million.

The Canadian communications company Nortel (Northern Telecom) will carry out a propriety test for Telrad Telecommunication & Electronic Industries, after which it will decide whether to exercise its option to acquire 20% of Telrad for $45 million. General Manager of Koor Industries Benny Gaon told Reuters that all conditions had been finalised in principle, and that the two companies would sign an agreement by the end of October.

Telrad General Manager Bezalel Levin told "Globes" that Telrad expects the collaboration agreement between the two companies, which expires at the end of the year, will be simultaneously extended and even expanded. The agreement increased Telrad’s revenues over the last two years by tens of percents.

In an interview with Reuters, Gaon said that Koor plans to issue Telrad in New York, though not before 1997. Gaon estimates the company will be issued at a value of $800 million. Gaon added that Nortel demanded equation of its holdings with those of Koor in the event of a public issuance, meaning increasing its holdings (before dilution) from 20% to 50%.

The option held by Nortel entitles it to acquire additional shares in Telrad according to company value of $225 million. Telrad’s value is assessed at $700 million.

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