Tellabs Talk Heats Up

Updated from 11:10 a.m.

Tellabs (TLAB Quote) has found another interested suitor as Nortel (NT Quote) steps up with a possible bid.

The Toronto telecom equipment supplier is considering a cash-and-stock offer for Tellabs, according to a source familiar with the discussion. A takeover price of $14 to $15 a share from Nortel was reported Thursday by Light Reading, a networking industry publication.

Tellabs and Nortel reps declined to comment.

Last month, TheStreet.com reported that the gearmaking joint venture Nokia (NOK Quote) Siemens (SI Quote) was in deal discussions with Tellabs with a price tag of $16 to $17 a share. Unlike the Nortel discussions, which seem to be heating up, the Nokia Siemens approach was not considered imminent.

Tellabs, which has seen a big slowdown in demand for its network switching equipment, has made no secret that it is considering its strategic options. And while the company's prospects aren't exactly bright at the moment, analysts say larger players could use the acquisition to bolster product offerings and more importantly gain a larger position with big U.S. telcos.

Wireless infrastructure giant Ericsson (ERIC Quote) had explored a possible deal with Tellabs several months ago, and some industry watchers say there may be some renewed interest there.