Ciena said Monday that it is in advanced talks to buy the optical networking and carrier Ethernet assets of Nortel Networks' Metro Ethernet networks business.

Toronto-based Nortel filed for bankruptcy protection in Canada and the U.S. in January.

Ciena – a telecommunications and network equipment company based in Linthicum, Md. – said that any agreements made with Nortel would be subject to a competitive bidding process under the United States Bankruptcy Code and the Canadian Companies' Creditors Arrangement Act.

In July, Ericsson entered into an asset purchase agreement to acquire the parts of the Carrier Networks division of Nortel relating to CDMA and Long Term Evolution technology in North America.

The purchase was structured as an asset sale at a cash purchase price of $1.13 billion on a cash and debt-free basis.

In August, Nortel defended the sale of its CDMA business and LTE access assets to Ericsson, saying it’s a good deal for Canada.

“It preserves the most number of jobs and puts these important assets in the hands of a global leader for sustained growth,” Nortel said.

RIM, based in Waterloo, Ontario, made a failed bid for Nortel assets and complained that it was shut out of the auction process. Nortel pointed out that courts in both Canada and the U.S. oversaw the sale process and found it was properly followed, and the courts OK’d the sale.

Nortel also said the sale to Ericsson does not pose a concern with regard to any issue of national security, and in the last 10 years, Nortel has not been able to use federal R&D tax credits to fund CDMA and LTE technology development in Canada. In fact, Nortel has suffered cumulative tax losses since 2001.

– The Associated Press contributed to this report

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