Network equipment maker Avaya (News - Alert) has agreed to sell its 59 percent stake in AGC Networks to India’s Essar Group for $44.5 million as part of a broader strategy designed to sharpen the focus on core business.
As per the announcement, Essar Group will pay $5.30 for every share for the 59.13 percent stake in AGC Networks and will offer to buy an additional 20 percent stake in AGC to comply with India’s regulatory rules.
Despite the sale of stakes, AGC Networks remains a key channel partner of Avaya serving customers in the India market, one of the fastest growing enterprise communications markets in the world, and in Australia.
Avaya says selling stake in AGC Networks will enable it to go forward and work with multiple partners so that it can better tap local growth opportunities.
The Essar Group is a multinational conglomerate involving in a wide range of businesses including steel, oil & gas, power, communications, shipping ports & logistics, construction and minerals. Its communications group is focused on the customer care and acquisition market.
The transaction, likely to close over the next five months, is subject to customary closing conditions, including those required by Indian law. One such condition is the completion by an Essar Group affiliate of a mandatory open offer made to public shareholders of AGC Networks. Under such open offer, the Essar Group affiliate shall offer to buy at least 20 percent of the voting capital of AGC Networks.
"The AGC Networks relationship remains key to Avaya's success in India and Australia -- both through the period of this transaction and beyond," said Jangoo Dalal, Managing Director, Avaya India. "In India we work together to serve some of the country's leading organizations spanning multiple business sectors and we look forward to continuing to work with AGC Networks as a trusted and well established business partner."
Established in 1986, AGC Networks is a converged communication solution provider focused on the Indian and Australia markets. It employs around 500 people, most of them in India.