« To Buy or Not Buy Avaya | Main | Nortel Running Second in Avaya Bid? »
Avaya Sale Imminent?
By Mark Evans | June 3, 2007
According to Lightreading.com, Avaya could be sold this week for more than $9-billion, or more than $20 a share. Citing a source, Lightreading said the two leading suitors are Nortel and a private equity firm, Silver Lake Partners. Nortel is apparently offering cash and stock, while Silver Lake is offering all-cash. A $20-a-sahre offer would be a 25% premium to Avaya’s closing price of $16.08 on Friday. According to Lightreading, J.P. Morgan Chase & Co. analyst Ehud Gelblum thinks “a combo cash + stock deal – which seems the most likely of scenarios – would require somewhere between 11% and 18% reductions in operating expenses for Nortel to offer a 15% premium and still have an accretive deal. If Nortel does consummate the purchase of Avaya, it would be the company’s biggest acquisition since it acquired Bay Networks in 1998. More important, it would be a huge move for a company still trying to right itself after a disruptive and troubling accounting scandal. To exacerbate the situation, Nortel also finds itself in the midst of a consolidating and increasingly competitive marketplace in which it needs to find a fertile and lucrative niche. So far, Nortel seems to be placing its bets on VoIP, Wi-Max and IP-TV. While VoIP is at the core of what Nortel does best - serving the needs of carriers - Wi-Max and IP-TV and fiercely competitive landscapes where Nortel does not appear to be an early leader.
Technorati Tags: Avaya, Nortel
Topics: M&A |