Tuesday, July 21, 2009

Nortel sells another Key Unit

The dismantling of Nortel Networks Corp. continued to gather speed yesterday after the once high-flying maker of telecom gear revealed that it has struck a deal to sell off yet another key business unit.

Operating under bankruptcy protection since January, Nortel said it has reached a deal to sell its Enterprise Solutions unit to New Jersey-based Avaya Inc. for $475 million US in a so-called “stalking horse” agreement that could pave the way for future bidders.

Avaya had been touted as a likely bidder for Nortel’s enterprise business, which supplies phone and other communications equipment to business around the world and recorded sales of $395 million during the first quarter of this year.

The deal is similar to one reached last month with Nokia Siemens Networks for Nortel’s CDMA-focused wireless division.

The joint venture between Finnish handset maker Nokia Corp. and Germany’s Siemens AG has agreed to pay $650 million for the unit and has pledged to keep about 800 jobs in Canada. A spokeswoman for Avaya declined to comment yesterday on whether the company’s purchase of Nortel’s enterprise division would impact employees.

Mike Zafirovski, the chief executive of Nortel, reiterated in a statement that Nortel is no longer attempting to restructure and emerge from bankruptcy protection, but is instead trying to sell off its most attractive divisions to the highest bidders.

Nortel filed for bankruptcy protection in January, citing high debt, high costs and the impact of the economic downturn. The event marked the beginning of the end for a company that was once considered to be the brightest star.

Avaya Announces Agreements to Purchase Nortel's Enterprise Solutions Business

Avaya Announces Agreements to Purchase Nortel's Enterprise Solutions Business

For Immediate Release: 20-Jul-2009

BASKING RIDGE, N.J. – Avaya today announced that it has signed agreements to purchase Nortel's enterprise solutions business for US$475 million. Avaya believes the agreements are a significant step in strengthening its leadership in business communications and positioning the company to effectively deliver industry leading enterprise communications solutions to customers around the globe.
"The addition of Nortel Enterprise Solutions will increase Avaya's global scale, expand our channel partner network, and strengthen our world-class portfolio of products and services," said Kevin Kennedy, president and CEO, Avaya. "This is a strategic opportunity to acquire talent and complementary assets that position the combined company for growth and success. We are committed to protecting the communications investments of the customers of Avaya and Nortel, and to effectively executing the integration of Nortel Enterprise Solutions and Avaya."
"As the largest reseller of Avaya and Nortel equipment to Canadian business, Bell believes Avaya's history of leadership in enterprise communications makes it an ideal candidate for this proposed transaction," said St├ęphane Boisvert, President of Bell Business Markets. "Bell was the first major service provider to standardize on both Avaya and Nortel IP telephony solutions, and we are confident Avaya will continue to provide partners and customers with innovative business communications technologies and responsive customer support going forward."
The proposed acquisition includes the Nortel Enterprise Solutions voice, data and government systems businesses.
"Avaya's proposed acquisition of Nortel Enterprise Solutions is good news for our customers, who would benefit from the broadened range of compelling solutions," said Hanif Lalani, CEO, BT Global Services. "BT and Avaya have been working closely, and successfully, over the last couple of years. Building on our success, BT has plans to expand this engagement with Avaya over the next year to offer a full unified communications portfolio. Today's news strengthens this expansion plan."
The transaction is subject to a competitive bidding process and requires the approval of the United States Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice. Avaya expects that hearings before those courts to approve bidding procedures will be held within the next couple of weeks, followed by an auction, with hearings for approval of the ultimate sale to be held thereafter.
In EMEA, Avaya has entered into an agreement with the Joint Administrators, on behalf of the EMEA entities for which they have been appointed and the transaction is subject to information and consultation with employee representatives and approval of the courts in France and Israel. The transaction is also subject to customary closing conditions, including receipt of necessary regulatory approvals.
About Avaya
Avaya is a global leader in enterprise communications systems. The company provides unified communications, contact centers, and related services directly and through its channel partners to leading businesses and organizations around the world. Enterprises of all sizes depend on Avaya for state-of-the-art communications that improve efficiency, collaboration, customer service and competitiveness. For more information please visit www.avaya.com.

Thursday, July 16, 2009