Avaya buys Nortel ES for $915M

Avaya won the stalking horse auction for Nortel's Enterprise Solutions division with a $915 million bid, according to the companies. Under the terms of the deal, Nortel will receive $900 million in cash, plus $15 million for an employee retention program, according to a Bloomberg report.

Multiple reports indicate that Siemens Enterprise Solutions also bid on the Enterprise Solutions Division, for which Avaya originally bid $475 million. Avaya gains access to Nortel's extensive enterprise customer list and will now take the lead in market share from competitor Cisco Systems. The Enterprise Solutions division had revenues of $465 million in Q2, a 28 percent year-over-year decline.

Silver Lake Partners, which owns Avaya, recently took the lead in the $2 billion buyout of 65 percent of Skype from eBay, as well.

Yankee Group analyst said in a statement what Avaya would now have 25 percent market share in enterprise telephony and said Cisco, long time market leader in this segment, would face stiffer competition from the combined Nortel-Avaya enteprise group. He said that Avaya also had trouble acquiring customers in the past, and the customers gained from the buy would solve that issue.

For more:
- see the Wall Street Journal article here

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