U.S., Canadian Courts Approve Sale Of Nortel Enterprise Unit To Avaya

Nortel confirmed Wednesday that it had obtained orders from U.S. and Canadian courts to approve the sale of its Enterprise Solutions business and shares of its government and DiamondWare businesses to Avaya.

Earlier this week, Avaya was named the winning bidder to acquire troubled Nortel's enterprise business for $900 million cash and a $15 million employee retention program. The sale is the second major Nortel unit to be auctioned off since Nortel filed for bankruptcy in January; earlier this year, it sold its wireless networks business to Ericsson.

According to a statement released by Nortel, Nortel received approval from the U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice. The courts ruled that the auction for Nortel's enterprise business generated the best price, was in the interest of all parties and was carried out fairly.

The court rulings are a significant legal step toward closing the Avaya-Nortel deal, though a separate asset sale agreement with Avaya for Nortel subsidiaries in other countries -- principally Nortel Networks U.K. Limited and Nortel assets in Europe, the Middle East and Africa -- means Nortel still needs approval from courts in France and Israel. The deal also requires regulatory approval before it's confirmed.

The court rulings come after U.S. Bankruptcy Court Judge Kevin Gross overruled objections to the acquisition from Verizon. Verizon had filed a claim suggesting the sale would be a national security risk, in that it would disrupt law enforcement, antiterrorism and other high-risk networks that run Nortel equipment.

Provided the deal goes through and Avaya acquires Nortel's enterprise portfolio, the big questions facing channel partners for both companies include what products stay and what products go. Nortel's assets would expand Avaya's partner base substantially but neither company has suggested how the portfolios might best be integrated.

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