Home Business Telecommunications Extreme bids to buy Avaya networking business for US$100m

Extreme bids to buy Avaya networking business for US$100m

Networking solutions vendor Extreme Networks has inked an agreement to acquire the networking business of troubled telecommunications company Avaya for approximately US100 million.

Avaya announced it filed voluntary petitions under chapter 11 of the US Bankruptcy Code in January and a statement from Extreme, issued on Wednesday, says the agreement will constitute a primary bid for the networking business in a sale process being conducted under Section 363 of the US Bankruptcy Code.

The California-based telecommunications company filed for Chapter 11 bankruptcy protection in January as part of a move to reduce debt of about US$6.3 billion, saying it would not sell its call centre business, but was trying to sell other parts of its business.

"The addition of Avaya's networking business is consistent with our growth strategy and will broaden Extreme's enterprise solutions capabilities by complementing our product portfolio across our vertical markets," said Ed Meyercord, president and chief executive of Extreme Networks.

"Furthermore, we expect the Avaya business to generate over US$200 million in annual revenue, increase our market share and offer new opportunities for our customers.

“Although our agreement is subject to required approvals, the timing of which is uncertain, we expect the combined businesses can achieve synergies and provide accretion to Extreme's fiscal 2018 earnings and cash flow."

In its statement issued yesterday, Extreme also said that “as the stalking horse bidder, Extreme will be entitled to a break-up fee and expense reimbursement, if it ultimately does not prevail as the successful bidder at the required auction for Avaya's assets”.

“The auction process and final agreement will be subject to the approval of the United States Bankruptcy Court for the Southern District of New York. In addition, completion of the transaction remains subject to customary closing conditions and regulatory approvals.

“The auction process and transaction closing are expected to conclude within three to four months.”

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).