11:27 AM

Investment Firms Pick Up Avaya For $8.2 Billion

Avaya said it has 50 days to solicit a better offer from a third party.

Investment firms continue to seek out and snatch up high tech companies, particularly those in the telecom marekt. The latest prize is telecom equipment provider Avaya, which announced late Monday that it had been purchased for $8.2 billion.

The acquirers are Silver Lake, an investment firm focused on "technology-driven growth industries," and TPG Capital, a private investment partnership.

"After an extensive review of Avaya's strategic alternatives with Avaya management and our financial advisors, the board of directors of Avaya determined that this transaction with Silver Lake and TPG provides the best value for Avaya's shareholders," Avaya's Phil Odeen said in a statement. He is the non-executive chairman of the firm's board of directors.

According to media reports, Avaya had private talks with other parties, including Nortel, about an acquisition over the past two months.

Avaya said the agreement provides for a 50-day period during which time Avaya can solicit proposals from third parties; the firm noted it does not plan to publicly disclose any such proposals "unless and until its board of directors has made a decision."

A former unit of Lucent Technologies -- itself recently taken over by Alcatel -- Avaya's origins date back to the old AT&T and its Western Electric division. David Roux, a co-founder and managing director of Silver Lake, took note of Avaya's historic past, stating: "We have full confidence in Avaya's excellent management to build on the company's remarkable technology and history, which spans more than a century, to deploy advanced IP communications solutions as a source of competitive advantage for customers."

Avaya owns an important patent portfolio and it still derives a substantial chunk of revenue from maintenance contracts; in recent years, Avaya has moved into the IP telephony, unified communications, contact centers and communications-enabled business processes.

The deal calls for Avaya shareholders to receive $17.50 a share, which represents a 4.7% premium over the closing price of Avaya stock Monday.

Last month, TPG Capital participated in a $27.5 buyout of Alltel Corp., the fifth largest cell phone provider in the U.S. Other buyouts of technology companies last month included Acxiom Corp. and the CDW Corp.

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