Avaya’s Nortel Bid Goes Through

Yesterday officially marked the end of the bidding process for several assets in troubled Nortel's portfolio, and, as expected, Avaya came in as the top bidder. Avaya has agreed to pay Nortel $900 million in cash and $15 million in reserve for employee retention programs and will acquire Nortel's Enterprise Solutions, Government Solutions, and DiamondWare business units. The deal is subject to regulatory and court approval, but it is expected to close by the end of the year.

Avaya entered into a “stalking horse” agreement to purchase these assets from Nortel in July, more than six months after Nortel filed for bankruptcy. Several other companies, including Aspect Software and Siemens, were rumored to have been interested in its enterprise solutions business, but in the end, Avaya emerged as the preferred bidder.

"This is fantastic news for our customers, as this will empower us to continue to deliver industry-leading solutions and services focused on unlocking the enterprise business potential enabled by unified communications. It provides the capability to chart our future with laser-focus, enabling customers to compete in new ways with greater scale and resources. We look forward to working closely with our customers, partners, and stakeholders during this pre-close phase to ensure that we continue to innovate to meet customers' needs with high-performance, efficient, and secure communications solutions," Nortel Enterprise Solutions President Joel Hackney said.

With the acquisition, Avaya now accounts for more than 30 percent of the global contact center market, cements its position in the worldwide market for several years, and boosts its play in the mid-market, Datamonitor analysts Daniel Hong and Ian Jacobs said in a joint statement.

Both argued, however, that Nortel has been stripped of many of its customers and dealers since it filed for Chapter 11 bankruptcy protection in January. Many competitors—Avaya included—have spent the past few months looking to lure Nortel’s channel customers away, and that could pose a challenge for Avaya moving forward.

Avaya also might struggle at first with the need “to replace much of the Nortel technology with its own product lineup” to eliminate redundancies and overlaps, Hong and Jacobs said.

But the International Nortel Networks Users Association (INNUA), a community of more than 4,000 members in 75 chapters around the world, today expressed its support for the acquisition of Nortel’s Enterprise Solutions group by Avaya.

“This acquisition marks a positive new chapter for INNUA and for Avaya,” the organization’s executive director, Victor Bohnert, said in a statement. “We are excited to begin working with Avaya, and are ready to turn the focus back on providing our members the great education, user-driven perspectives, and other services they have come to depend on."

“Both Nortel and Avaya have been at the forefront of delivering high-quality, innovative products to the market. With their strengths now combined, we believe the customers of both companies will be the true winners of this deal,” Bohnert said.

INNUA President Steve Ford was equally enthusiastic. “I am optimistic that the results will be positive for both Avaya and for INNUA members,” he said in a statement.