After a full weekend of auction activity, Avaya Inc. has emerged as the winning bidder of insolvent Nortel Networks' enterprise division.
The privately held Avaya, which competed against rival equipment maker Siemens, will pay $900 million for the unit, almost double its original offer of $475 million. Avaya also will set aside $15 million for an employee-retention program. Nortel and Avaya hope to close the transaction some time in the fourth quarter.
Avaya’s victory gives it Nortel’s global Enterprise Solution business as well as some of the government-focused assets and DiamondWare Ltd., a software development offshoot of Nortel. But the deal isn’t done yet – bankruptcy courts and regulatory agencies in the United States, Canada, France and Israel still must give the union their blessing. And in Delaware, there’s a question over whether a plea by Verizon Communications Inc. not to allow a sale to Avaya will hold up the buyout’s progress. Verizon fears Avaya will refuse to maintain and repair the Nortel equipment it’s sold to government, medical and other entities, thereby endangering homeland and national security, it said last week. There was no word from Verizon on that front Monday morning.
Meanwhile, Nortel executives called the sale “fantastic news for our customers,” perhaps in an attempt to mitigate the concerns Verizon has posed.
“Through the deal close and beyond, we will deliver on our stated customer commitments and maintain high levels of service and support,” Joel Hackney, president of Nortel Enterprise Solutions, said in a prepared statement.
Chuck Saffell, CEO of Nortel’s Government Solutions branch, made a similar comment.
“Our goal continues to be helping our customers provide security, livelihood and well-being for the citizens of the United States,” he said in a press release.
Avaya's Kevin Kennedy, president and CEO, agreed.
"Our successful bid brings us closer to adding Nortel and its complementary channel, portfolio, research and development, and global presence to Avaya," he said. "We believe the acquisition brings inherent value to both organizations' customers, employees and partners, and we look forward to its successful conclusion."
To that end, Nortel channel partners, too, should expect business-as-usual, executives noted. For now, anyway. They said partners for both Nortel and Avaya will “have opportunities to grow their business as the move to unified communications accelerates.”