Canadian telecommunications manufacturer Nortel announced today it will exercise an option, given two years ago, to acquire 20% of Telrad, of the Koor group, for $45 million. Concurrently, a cooperative agreement will be drawn up between the two companies, under which Nortel will continue to open export markets to Telrad and initiate cooperative agreements. The agreement will be signed January 27, 1997.
After the deal is executed, Koor intends to issue Telrad shares on Wall Street at $800 million company value, in which case Nortel will acquire an additional 30%, making its stake in Telrad equal to that of Koor. Nortel will exercise the option at only $225 million company value.
Nortel’s option was given in 1995 as part of a cooperative agreement between the two companies in the field of switching equipment export to Nortel, Telrad equipment sales to Nortel, product development to be supplied by Telrad to Nortel, and research and development done by Telrad on behalf of Nortel.
Nortel and Telrad already have many exchange of know-how agreements between them.
Telrad 1995 sales were NIS 1.25 billion of which NIS 350 million were to Nortel. Net profits were NIS 124 million. During the first nine months of 1996, Telrad profits were NIS 144 million and revenues reached NIS 1.19 billion.