September 17, 2009
Judges in Delaware and Ontario have approved Avaya's purchase of Nortel Networks' Enterprise Solutions unit. The $900 million acquisition paves the way for Avaya to become the largest enterprise phone equipment maker in North America.
At the same time, U.S. Judge Kevin Gross turned down a challenge by Verizon Communications, which had objected to the sale because it maintained Avaya was threatening to drop maintenance of some Nortel security and anti-terrorist gear after the takeover. "The sale is going forward on the terms that the court previously approved," said Gross. The deal is for $900 million plus an additional $15 million for an employee-retention program. Avaya has said it expects to keep at least 75% of the employees in the enterprise operation. Judge Gross said that Verizon hadn't shown that Avaya and Nortel were the only firms capable of serving the security and public safety operations. "All that Verizon has ever asked for" said Verizon attorney Darryl Laddin, according to media reports, "is the assumption of their existing contracts, and nothing more." The acquisition will catapult Avaya into the vanguard of enterprise telephone gear, giving it 27% market share to Cisco's 21%, according to recent figures from Frost & Sulivan. Avaya had to increase its bid in the auction when Siemens Enterprise Communications and Gores Group joined the bidding. In the end it paid much more than its original bid. On Wednesday, Ericsson acquired Nortel's CDMA/LTE operation for $1.13 billion when a Canadian government official ruled that the Ericsson offer was final. Still left to be auctioned off is Nortel's Metro Ethernet business. Nortel filed for bankruptcy protection in January.
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