The fall out of the proposed $9.1 billion acquisition of Bay Networks continues, with Shiva revealing that its joint venture with Nortel has been radically scaled back, leading to the closure of a Scottish development plant.
Shiva renegotiated its extensive deal with Nortel in March because, according to Phil Crocker, senior director of European marketing, the company had an inkling Nortel would bid for a competitor.
The companies still have an OEM agreement and Crocker tried to shrug off the Bay deal, claiming it gave Shiva a chance to refocus on the end user market. He said: ?Our business is to sell remote access to businesses and Nortel?s market is carriers, so we renegotiated. We had defocused to meet Nortel?s needs.?
Shiva and Nortel have had a ?virtual joint venture? relationship for three years, which involved the remote access firm developing products for Nortel?s telco customers - products that overlap with some of Bay's range. Nortel also funded Shiva's service provider group, established in 1996.
The revised deal makes Nortel a Shiva OEM. Nortel is contracted to acquire between $50 million to $80 million worth of Shiva software and services over the next 18 months, plus has an option to acquire for $26 million rights to code for jointly developed products.
The changed terms have led to the closure of Shiva?s development plant in Edinburgh, which employed 106 staff, and a further 19 worldwide. Nortel funded 40 of these staff, who were mostly in Edinburgh. Crocker said staff have either left or relocated to other Shiva sites.
Crocker said: ?The Nortel/Bay acquisition does not affect this organisation. Even if Nortel believes it has a better solution from Bay it still has to pay us. It's a fixed deal.?
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