Avaya has beaten Siemens Enterprise Communications in the bidding war for Nortel’s enterprise business.
The firm will pay $900 million for the unit, Nortel’s Government Solutions group and DiamondWare Ltd., a Nortel-owned maker of softphones.
Avaya will also contribute an additional pool of $15 million for an employee retention program. That price is [nearly twice what Avaya was initially said to be buying the enterprise business for back in July] before the bidding kicked in.
Avaya has sought Nortel's enterprise business in hopes of boosting its share of the enterprise telephony and unified communications markets, and getting more customers to migrate to its IP line of communications products.
The sale, expected to close later this year, is subject to court approvals in the US, Canada, France and Israel as well as regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments. Telecom carrier Verizon, however, is expected to contest the sale on the grounds that Avaya does not plan to retain customer support contracts between Nortel and Verizon.
Nortel customers hope the deal works out in their interest.
"Nortel earned the trust of our user group members by delivering innovative, reliable communications solutions and ensuring high-levels of service and support, " said Victor Bohnert, Executive Director of the International Nortel Networks Users Association, in a prepared statement.
"With the announcement of today's purchase by Avaya, we look forward to extending that relationship forward to serve the business communications needs of our constituency base across the globe."
“While Avaya’s acquisition of Nortel’s enterprise unit has certainly created an enterprise powerhouse, Avaya will not possess the necessary expertise to support and repair legacy Nortel equipment – nor is it likely to have any motivation to gain this expertise,” said Askar Sheibani, CEO of Comtek, a Europe-wide provider of IT repair services.
“Avaya’s goal will be to streamline the two sets of products, migrating Nortel customers onto its latest enterprise offerings. While the acquisition could result in bigger and better enterprise products moving forwards, the truth is that many organisations are perfectly happy to continue using their existing equipment, and don’t want to – or worse, can’t afford to – be forced into replacing it.”