Avaya to buy Nortel's enterprise biz for $915 m

Earlier in January, Nortel Networks Corp’s certain subsidiaries in the US and Canada had filed for bankruptcy protection in the wake of global financial crisis. Internet protocol based communication company, Avaya beat out Siemens Enterprise Communications for the Toronto-based telecom equipment vendor’s enterprise business.

“Avaya Inc has emerged as the winning bidder agreeing to pay US$900 million in cash to Nortel, with an additional pool of US$15 million reserved for an employee retention program,” Nortel Networks said in a statement on Monday.

The deal will enable Nortel’s customers “to compete in new ways with greater scale and resources,” Nortel Enterprise Solutions President Joel Hackney said. The acquisition will also make Avaya a more formidable competitor against rival Cisco Systems.

Nortel’s principal operating subsidiary Nortel Networks Ltd and some of its other arms, including Nortel Networks Inc and Nortel Networks UK Ltd, have successfully concluded auction of all of the assets of Nortel’s global Enterprise Solutions business as well as the shares of Nortel Government Solutions Incorporated and DiamondWare Ltd, the company said.

Both the companies have significant presence in India. Nortel’s major clients in India include Reliance Infocomm, BSNL and BPL Mobile Communications, GAIL and Bharti Group.
The sale is subject to court approvals in the US, Canada, France and Israel as well as regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments.

Besides, Nortel would seek Canadian and US court’s nod for the proposed sale agreement at a joint hearing on September 15. The sale close is expected late in the fourth quarter 2009.

In addition, given the complementary strengths of the two companies in the US the combined operations are anticipated to yield a company best-suited to address the unique information technology requirements of the civil government and military.