Avaya Deal Raises Concerns

By Mark Evans | Published: August 27, 2009

It looks like Avaya’s proposed $475-million acquisition of Nortel’s enterprise business could face some stumbling blogs as a growing number of industry players express concern it would reduce competition.

The Wall St. Journal reports that the U.S. Department of Justice has received a letter and a complaint recent requesting it to block the proposed deal.

“My company believes that this transaction will detrimentally affect and lessen competition, deny choice to consumers and ultimately raise prices,” said Jim Goebel, president with Sotel Systems, in a letter to the DOJ.

Goebel told the WSJ that the DOJ held an hour-long call between himself and six DOJ officials earlier this week.

The DOJ also received a verbal complaint from Ross Debernardis, president and CEO with ACCESS Communications, who is concerned about the stalking horse agreement’s “lack of teeth.”

He said Avaya won the auction for the enterprise business, it could delay closing the deal, and, in the meantime, continue to recruit Nortel customers and re-sellers.

This entry was posted in Financials and tagged avaya, DOJ, Enterprise, Nortel. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

thidisbogus

Jeff you are primarily an Avaya dealer so it is no surprise you are supporting the sale to Avaya.
jeffwiener

How much merit is there in the complaint to the DOJ ? If there were multiple competing offers for Nortel’s Enterprise assets, all equal in scope and dollar, then perhaps it might make sense to look into whether this acquisition might be uncompetitive. To date, there are no other offers. Nortel has been in bankruptcy since January, and they have received ONE offer for their enterprise business.

I wrote a blog post, and a letter to the DOJ (which I will post later) which can be found here:

http://www.thetelecomblog.com/2009/08/27/surprise-surprise-%e2%80%93-avaya%e2%80%99s-bid-for-nortel-raises-doj-concerns/

Jeff
Troller

I'd be surprised if Avaya turned out to be the only bidder. And I'd also be surprised if any other bidders publicly emerged before the deadline of September 4. Just like on eBay: why signal to the competition your interest and give them an extra opportunity to sharpen their pencils for a higher bid? Better to swoop in at the last minute and snipe if you can. Just as NSN seemed to own the CDMA/LTE field for about a month, until the private equity company and Ericsson placed their bids on the final allowable day.
GoProto

I totally agree, a good poker player never shows his hand. It will be interesting,
ntpurgatory

Forgive me, but ACCESS and Sotel... These spares have clout here? Sounds like noise to me...
Teleguy

This is not unusual. And can you write your blog entries with a spell check please? It's "blocks", not" blogs".
GoProto

Spell Check wouldn't have caught it, as "blog" is a word, and spelled correctly, it is not capable of discerning ideas or statements that are out of context or don't make sense.
Teleguy

Point taken. So, an editor who knows how to write better than the blogger (being sober counts)?
GoProto

Umm .. not sure how to take that.

GP
less

We all took a cue from Nortel and outsourced our proofreading to one of the many centers of English excellence abroad.

*EDIT by Yang: cinders of oscillance a broad
GoProto

Ah.. the infamous Centers of Excellence, no doubt held in the highest regard by The Recognized Leader(s), eh, Less?
Stamps of Approval all around, I'll pick up the tab..
MichelangeloF536

Maybe it was intentional, or at least an amusing Freudian slip...
GoProto

That thought actually crossed my mind. Sometimes.. irony is at it's best when it is understated..
tiredofitall

I guess no one cares (least of all my employer or my government) about my concern to remain employed?
free_agent

Indeed, in bankruptcy proceedings, the legal obligation is to obtain as much value (money) for the creditors as possible. Reducing that money just to keep employees employed is explicitly not allowed.

As always, the best (only) job security is a good resume.
GoProto

Yep, unfortunately you are quite right. Wish I could say it were different but it's not.
tiredofitall

In the end we all have ourselves to count on. But that's about it.
NortelTragedy

The Carolina Chocker is at the helm ... any market share had will soon be lost.

Competitors should not worry about Nortel or The Carolina Chocker, that is unless their daughter, niece or granddaughter attend late night basketball games in North Carolina.
Moose_Chaser

I think you mean "Choker".

MC
NortelTragedy

Yes, you are correct MC. "The Carolina Choker" ... Jesse Joel Hackney would strangle me (or try to) for spelling his name wrong.

Ya know, we need to do a song based on Steve Miller's "The Joker" ... but called "The Choker".

Some people call me the Nortel cowboy.
Yeah! Some call me the gangster of UNC-Chapel Hill.
Some people call me Jesse Joel,
'Cause I speak of the pompatus of ....
protosphere

Ericsson already led wireless with a 34% marketshare before acquiring Nortel's assets

I didn't hear anyone bellyache about Ericsson capturing lions share.
GoProto

Nope, no one complained. maybe they didn't have time to sit around and stew about it, as everyone thought NSN had the deal sewn up and Eric literally seemed to come out of the blue..?
protosphere

"Eric literally seemed to come out of the blue"

yes =)

...and perhaps Eric should have first researched how Alcatel's UMTS acquisition was coming along as I didn't see Alcatel-Lucent bid on anything further =)
GoProto

Perhaps. Maybe that Nortel Blue had them hypnotized...
dg123

Both companies are connected at least peripherally to Siemens. It's not surprising they wouldn't be happy with an Avaya deal. It also goes without saying that these guys are certainly not major players. It's just a few weeks from the auction and I wonder if anybody of any consequence has complained other than one written and one verbal from two pretty small companies with a vested interest in Siemens?
cwlh

I rather like the idea of a "stumbling blog". Is AAN a "stumbling blog"?
HMS_U

Stop drinking the cool aid. You'll stumble less :)

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