Avaya Close To Deal For Radvision, Says Report

Avaya plans to pull the trigger on an acquisition of videoconferencing vendor Radvision as soon as this week, according to a published report in the Israeli newspaper Globes. The price is between $200 million and $250 million, the newspaper reported, and trading on Radvision's stock was halted Wednesday on the Tel Aviv Stock Exchange for a brief period.

It's the second time that Globes, which frequently publishes anonymously sourced reports on M&A activity involving Israeli tech companies, has mentioned a potential Avaya buyout of Radvision. Globes first reported in December that Avaya and Radvision were in late-stage talks.

Representatives from Avaya and Radvision declined comment to CRN.

Avaya has acquired several companies in the past two years with technologies that round out its unified communications and contact center portfolios, and the company has sought a bigger presence in business video, where its chief UC rival, Cisco, dominates.

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Radvision has been on the defensive since losing an OEM relationship with Cisco in 2010, following Cisco's acquisition of videoconferencing heavyweight Tandberg. At one point, the OEM agreement with Cisco constituted more than one-third of Radvision's revenue, and Radvision has spent the past two years expanding its videoconferencing and mobile video wares to make up ground.

The move would make sense for both companies, industry analysts said Wednesday.

Zeus Kerravala, founder and principal analyst with ZK Research, wrote in a post to NoJitter.com that Radvision is in need of a stronger marketing strategy and that Avaya, which is headed for an IPO, needs a bolstered video story to make it attractive to investors.

"Video is hot and, unlike in the past, this momentum appears to be sustainable," Kerravala said. "Right now Avaya's video strategy is the Desktop Video Device and partnerships, but that doesn't really allow Avaya to directly benefit from the growth of the video market."

Avaya, with its growing emphasis on app development and software programs for third-party developers, also would benefit from Radvision's BEEHD voice and video developer tools, Kerravala noted.

In a report released this week, Infonetics Research pegged the enterprise spend on videoconferencing and telepresence hardware and software to be a cumulative $22 billion from 2012 to 2016. The global enterprise video and telepresence market gained 15 percent, to $882 million, between the third and fourth quarters of 2011, according to the researcher, and hit $2.99 billion in sales for the full year, up 34 percent year over year.

Cisco, said Infonetics, is the clear market leader, with fourth-quarter 2011 revenue up 25 percent sequentially and global market share at 52.5 percent.

"The videoconferencing market is being fueled by a confluence of factors, including the proliferation of video-capable equipment, demographic and communication trends that favor video, industry use cases like telelearning and telemedicine and, most importantly, customer demand," Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics, said in a statement.