Nortel to Sell Enterprise Business to Avaya

By Mark Evans | Published: July 20, 2009

After weeks of speculation, Nortel is selling its enterprise business in Europe, the Middle East and Africa to Avaya for US$475-million.

It has also entered into a “stalking horse” asset and sale agreement to sell its enterprise operations in North American, Latin America and Asia to Avaya. This means Nortel could sell the assets to someone else if a higher bid emerges – much like it has structured the CDMA and LTE R&D unit sale to Nokia.

In a statement, Nortel said these “agreements include the planned sale of substantially all of the assets of the enterprise solutions business globally as well as the shares of Nortel Government Solutions Inc. and DiamondWare Ltd.”

With the CDMA and enterprises businesses now being that much closer to being sold,Matlin Patterson’s interest in buying Nortel will have to take on even more urgency.

If it doesn’t act quickly, Nortel will have completed the firesale, leaving nothing good to buy.

Source: MarketWatch

More: Here’s the Avaya press release, including a statement by CEO Kevin Kennedy:

“The addition of Nortel Enterprise Solutions will increase Avaya’s global scale, expand our channel partner network, and strengthen our world-class portfolio of products and services. This is a strategic opportunity to acquire talent and complementary assets that position the combined company for growth and success. We are committed to protecting the communications investments of the customers of Avaya and Nortel, and to effectively executing the integration of Nortel Enterprise Solutions and Avaya.”


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  • TongueInCheek
    There is an interesting tidbit in the Sale Agreement file with the courts yesterday. In Section 3.3: Financing it shows that Avaya had unrestricted cash on their balance sheet of $530 Million as of June 30th with an additional $200 Million available through revolving credit facilities.

    If another organization has interest in Avaya there is now clear information on available cash and how another organization could potentially structure a bid to effectively eliminate Avaya from participating.
  • less
    In related news, Avnet's bid to buy neighbor Nortel's parking lot in Richardson was rebuffed by Mike Z because "Avnet couldn't possibly fill it"
  • Meridian
    Kevin Kennedy of Avaya - if you are reading this blog please consider an answer.

    NSN announced along with their bid for CDMA how many Nortel staff they expected to offer jobs to. In the AVAYA bid for Enterprise, there is no mention of it and both Mike and Joel are tight-lipped saying they will wait until the successful bidder emerges after the auction is complete.

    What that tells all of us as current Nortel Enterprise employees is that the AVAYA offer must be pretty dismal for the staff involved. We have been looking forward to a potential suitor for our business. If you are considering taking on a significant # of Nortel staff, please publicize atleast general guidance so we can continue to make Enterprise positive for your acquisition or give us a chance to work our plan B before Nortel illegally lets us go with no severance.

    Come on ... have a heart and show us some integrity - something that both Mike and Joel have no clue about.
  • scalppeeler
    If Enterprise is plug and play not looking good for employees.
  • protosphere
    "Chuck Saffell, Chief Executive Officer of Nortel Government Solutions, said: "Nortel Government Solutions has built a robust product and services business for U.S. Federal government customers. If successfully concluded, this agreement will offer Avaya the opportunity to continue to grow this business and bring further value to customers."

    (Nortel paid $448M for PEC /Nortel Government Solutions)
  • MerlintheWizard
    400 M Per Quarter and Q2 expected to be 10% more, also Q1 made a loss of 128m, but on track to make profit Q4 as the cost cutting is getting rid of things we dont need,,,sounds like Avaya will get a good deal, a very good deal
  • Troller
    Apparently Chapt 11 in the US, and corresponding legislation in Canada, requires the stalking horse process. Things are different outside NA. It does beg the question though, how could Nortel possibly divest Enteprise EMEA to one company and Enterprise NA somewhere else? Likely this all represents a fait accompli for Avaya worldwide.
  • A_Peon
    Nortel , in the old times bought stupid businesses for billions of $ and they are selling a major player in the business of enterprise for peanuts.
    why sell at so low price ? who will benefit from that ?
  • kph
    Well, the executives will benefit of course. And E&Y will benefit because they'll make a fortune executing the transaction. But apart from that, everybody else gets hosed.
  • normanZ
    It makes me physically sick that Hackney shows SO much excitement that Enterprise is being sold. How can this be such a good thing for anyone except for him? Please tell me who to send a letter to at Avaya begging them not to take with them this "leader"...
  • FormerBayGuy
    Perhaps we should start a web campaign? "Sack the Hack!"
  • Meridian
    I like "Hackey-sack"
  • joremero
    sooo, no stalking horse for Europe, ME, and Africa?hhmmm
  • zeroman
    well it says SOLD for europe. looks like a premption to anyone else. they would be restricted to america only.
  • anotheropsguy1
    Think you are wrong my friend, the stalking horse is for all of Enterprise globally.
  • tfig
    There is no such thing as a stalking horse in EMEA, the administrators have total control and can sell to whoever they want.

    Most likely they will just sell the EMEA business to whoever wins the stalking horse North America but they could not if they decided it was not in the best interests of creditors.
  • NTblinker
    what might this mean?
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