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Avaya Mulls Leveraged Buyout From Private Equity Firm, Says Report

A private equity firm may be courting Avaya for a leveraged buyout offer of more than $5 billion, including debt, according to a new report.

Communications equipment and software provider Avaya Holdings may be considering a leveraged buyout offer from a private equity firm that values the company at more than $5 billion, including debt, according to a Sunday Reuters report.

The current offer is for about $20 per share and is designed to cover Avaya’s $3.2 billion in debt, according to the report, which cited people familiar with the matter. The private equity bidder’s name has not been revealed.

The report comes a little more than one year after the UC specialist completed its debt restructuring and emerged from Chapter 11 bankruptcy in December 2017.

[Related: Rejuvenated Avaya Channel Program Set To Help Partners Go After Hybrid Communications Opportunities]

Santa Clara, Calif-based Avaya did not respond to CRN's request for comment prior to publication.

Since coming out of the other side from bankruptcy, Avaya has been focused on shifting to a cloud-based business model and bringing on more cloud solution provider partners. Avaya does upward of 80 percent of its sales through the channel.

Avaya's global director of channel strategy and programs, Carl Knerr, told CRN in January that the company was refreshing its Edge Channel Partner Program with the goal of fueling sales growth across both premises-based and cloud communications. The revamped program would help partners “talk cloud” with their customers, as well as help these solution providers shift from an up-front revenue model to a monthly recurring revenue model, he said.

The company reported that software and services accounted for $738 million in revenue in the last quarter of 2018, down from $752 million in the same year-ago period. Avaya said that currency exchange rates and the U.S. federal government partial shutdown was responsible for the drop in earnings.

Avaya has been courted by several private equity firms interested in an acquisition over the past few months, but there is no certainty the latest offer will result in a deal, sources said in the latest report.

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