Nortel Divesting Layer 4-7 Gear (Updated)Nortel Divesting Layer 4-7 Gear (Updated)

Radware will acquire Nortel's application-layer switching product line.

Remember that weird rumor a few weeks back that Radware was going to buy one of Nortel's divisions, possibly Metro Ethernet, for about $30 million-$50 million? The rumors seemed nuts when you considered that other companies were talking about paying $1 billion for Metro Ethernet, but now we know the kernel of truth behind them, as Nortel today announced Radware's acquisition of a different product line, its Layer 4-7 data portfolio.The products included in the transaction include WAN accelerators and application switches, application accelerators and a Virtual Services Switch, which combine security features like firewall and intrusion prevention with application-layer services. The portfolio was based on the startup Alteon WebSystems, which Nortel acquired in 2000 for...guess how much?

$7.8 billion.

I haven't been able to track down an official price tag on the sale of the Layer 4-7 division, but the reports from last month indicated that Radware had about $137 million in cash, and so that $30 million-$50 million figure seems in the ballpark for them to be laying out for an acquisition. Mark Evans at All About Nortel says the price tag could be in the neighborhood of $20 million.

This is the second technology that Nortel has dumped since filing for bankruptcy protection on January 14. Late last month, Nortel announced it would get out of the Mobile WiMAX business.

Update: Here's a useful FAQ from Nortel on the deal. It looks like the nature of the transaction is that another buyer could opt to come in and outbid Radware, though still no indication here of what Radware paid.Radware will acquire Nortel's application-layer switching product line.