Nokia Siemens Networks and private equity firm One Equity Partners have jointly bid for Nortel Networks Corp's optical networking and carrier ethernet business, a person familiar with the sale said on Wednesday, challenging Ciena Corp's $526 million bid for the assets.

Last month, the bankrupt Canadian telecommunications equipment maker said that Ciena's cash-and-stock bid would be the stalking horse offer for these assets.

The Ciena offer of $390 million in cash and 10 million in Ciena shares set a floor price for these assets and allowed Nortel to seek competing offers. Based on the closing price of Ciena's stock on Wednesday, the stock component is valued at $136 million.

Analysts and investors have been concerned about Ciena's offer because if it wins the auction, the U.S. networking gear maker would have to take significant pains to integrate the Nortel assets. Although the assets are a good fit for Ciena's portfolio, the deal would weigh down operations, they said.

Ciena's stock fell sharply after it revealed the proposed deal last month. But the shares rallied after Nortel delayed an initial deadline for offers for the assets to November 17 because of interest from other bidders.

On Wednesday, Ciena shares rose 40 cents to $14 in after-hours trade after closing down 3 percent at $13.60 on the Nasdaq.

Nortel, once North America's biggest telecoms equipment maker, filed for bankruptcy protection in January. It is selling off its assets rather than trying to restructure.

It is unclear if another bidder also put in an offer to rival the one by Nokia Siemens and One Equity, which manages $8 billion for JPMorgan in private equity investments.

Separately, Nortel said on Wednesday the final auction will be held on November 20.

Officials for Ciena and Nokia Siemens were not immediately available for comment. Officials for JPMorgan and Nortel declined to comment.

(Reporting by Anupreeta Das; Editing by Carol Bishopric, Bernard Orr and Matthew Lewis)

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