Avaya Bidding $475M For Nortel's Enterprise Business

Avaya plans to scoop up Nortel Networks' enterprise solutions business for $475 million, as Nortel seeks to sell off all of its divisions to pull out of bankruptcy.

Avaya Monday in a statement said it has signed agreements to purchase Toronto-based Nortel's enterprise solutions business, which includes Nortel product lines such as its Ethernet Routing Switches and Communications Server IP telephony platform, for $475 million.

"Avaya believes the agreements are a significant step in strengthening its leadership in business communications and positioning the company to effectively deliver industry-leading enterprise communications solutions to customers around the globe," Avaya said in the statement.

For the past month, rumors have swirled that Avaya was prepping a roughly $500 million offer for Nortel's enterprise solutions division, which ties together Nortel's data, voice and government solutions offerings.

The acquisition will propel Avaya to the top of the heap while also helping grow out its channel organization, said Avaya Kevin Kennedy, president and CEO of Basking Ridge, N.J.-based Avaya, in the statement.

"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," Kennedy said. "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."

Nortel filed for Chapter 11 bankruptcy protection in January after a decade of missteps and toppling revenue . Last month, Nokia Siemens said it planned to acquire Nortel's LTE Access and CDMA wireless business for $650 million, a deal that was approved by the Federal Trade Commission earlier this month. At the time, Nortel said it planned to put the remainder of its divisions on the auction block.

The Avaya deal is subject to a competitive bidding process and requires approval of the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice. Avaya said it expects that hearings before those courts to approve bidding procedures will be held within the next couple of weeks, followed by an auction, with hearings for approval of the ultimate sale to be held thereafter.

Nortel's bankruptcy auction is expected to be held July 24 in New York City, followed by a July 28 hearing. The deadline to submit bids for Nortel assets is July 21.

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