14 DAY TRIAL // Enterprise-phone equipment company Avaya has reportedly won a bid for the acquisition of Nortel Networks Corporation's Enterprise division. According to the news around the Internet, the company has agreed to pay around $900 million for the unit and also to spend $15 million for an employee-retention program.
As many of you might already know, Nortel filed for bankruptcy at the beginning of the ongoing year, and there are a lot of companies interested in purchasing different units. Avaya, which is at the moment the second largest enterprise-phone equipment company in North America, agreed on taking a minimum of 75 percent of Nortel's enterprise employees when the transaction is closed.
When the transaction is closed, Avaya's market share will rise from about 17-18 percent at the moment to 27 percent, placing the company on the first position on the market, surpassing the current leader, Cisco Systems Inc., which is said to account for 21 percent of market share. However, the deal is to be approved by both Canada and the U.S. bankruptcy courts.
While the International Nortel Networks Users Association (INNUA) stated it supports the deal, some of Nortel's customers, such as Verizon, are not as happy with it. According to The Wall Street Journal, the carrier “asked the bankruptcy court to reject the Avaya sale 'unless it includes, with absolute certainty' an agreement by Avaya to take on Nortel's Verizon contracts.”
The bankruptcy courts of Canada and the US have set a joint hearing on the transaction for today, WSJ notes. In case the deal is approved, Avaya will receive access to a wide range of corporate customers, including more than 80 of the Fortune 100 companies. It seems that Nortel expects for the deal to close in December, after regulators have looked into it.
“This acquisition marks a positive new chapter for INNUA and for Avaya.” said INNUA’s Executive Director Victor Bohnert. “We are excited to begin working with Avaya, and are ready to turn the focus back on providing our members the great education, user-driven perspectives, and other services they have come to depend on. Both Nortel and Avaya have been at the forefront of delivering high-quality, innovative products to the market. With their strengths now combined, we believe the customers of both companies will be the true winners of this deal.”