Avaya wins bidding war for Nortel enterprise unit

Avaya Inc. will proceed with its plans to acquire the enterprise assets of Nortel Networks Corp. following a bid worth US$915 million, the company said Monday.

Plan the perfect virtualization project

Click here to use the tool today for free

Other companies rumoured to have been interested are MatlinPatterson, a private equity firm holding about US$400 million in Nortel bonds, and Munich-based Siemens Enterprise Communications, also known as SEN Group.

Nortel has been operating under bankruptcy protection since January and is trying to sell its business units. Its enterprise product portfolio, which was built up in part through its acquisition of Bay Networks in 1998 for US$9 billion, includes phones, PBXs, firewalls, Ethernet routing switches, virtual private networking, network access control, key systems, voice switches and media gateways.

For more news on the Nortel breakup Check out our Nortel interactive timeline

As a condition of the deal, Avaya is required to hire at least 75 per cent of Nortel’s enterprise employees.

“We believe this combination provides for our current and future customers is investment protection – and a clear path forward,” Joel Hackney, president of Nortel Enterprise Solutions, said Monday during a conference call. “We absolutely will stand behind our customer commitments.”

Hackney said Nortel expects bankruptcy courts will approve the deal Tuesday and it will close in late December.

The US$915 million Avaya is paying is comprised of US$900 million in cash to Avaya and US$15 million in “employee retention.”

Hackney said the companies have “not defined more details” on the $15 million.

Avaya’s sucess comes on the heels of a complaint lodged by Verizon in a Delaware court, claiming that Avaya refuses to maintain contracts for equipment Verizon bought from Nortel that’s in use by the U.S. federal government.

“Without this ongoing maintenance, service and support by the debtors, the continued communications capabilities of the government and business customers that are served by Verizon through the resale of the debtors (services) … are at significant risk of disruption,” Verizon said in the court documents.

Hackney said Monday he does not expect the dispute between Verizon and Avaya to stop the acquisition.

He would not confirm the names of the other two bidders but said that would eventually be revealed in court documents.

-With files from Greg Meckbach

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Shane Schick
Shane Schickhttp://shaneschick.com
Your guide to the ongoing story of how technology is changing the world

Featured Articles

Empowering the hybrid workforce: how technology can build a better employee experience

Across the country, employees from organizations of all sizes expect flexibility...

What’s behind the best customer experience: How to make it real for your business

The best customer experience – the kind that builds businesses and...

Overcoming the obstacles to optimized operations

Network-driven optimization is a top priority for many Canadian business leaders...

Thriving amid Canada’s tech talent shortage

With today’s tight labour market, rising customer demands, fast-evolving cyber threats...

Staying protected and compliant in an evolving IT landscape

Canadian businesses have changed remarkably and quickly over the last few...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now