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Avaya closes on $900M acquisition of Nortel's Enterprise unit

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RESEARCH TRIANGLE PARK, N.C. – Communications gear maker Avaya closed Friday on its acquisition of bankrupt Nortel’s Enterprise business unit.

The deal includes the transfer of some 6,000 Nortel employees to Avaya, including more than 200 among its 1,600 remaining employees in RTP.

Twenty-five senior Nortel managers also moved to Avaya, according to the company.

Joel Hackney, Nortel’s senior executive in RTP, recently accepted a position with Avaya’s government business unit.

Avaya, which is privately held and is based in New Jersey, paid $900 million for the Nortel business plus another $15 million in retention bonuses for Nortel managers.

"The completion of this acquisition represents another major step in Avaya's evolution and growth in the communications industry," said Avaya Chief Executive Officer Kevin Kennedy. "Avaya and Nortel Enterprise Solutions share a common vision for the future of business communications. By combining our complementary technology portfolios, deep industry specific domain expertise, sales channels and customer bases, the new Avaya will redefine business communications and help customers to reduce costs, simplify operations and increase their business agility."

Avaya had said it will retain some 60 percent of the Nortel Enterprise employees.

The Enterprise unit supplies landline phone systems and other communications equipment to businesses and large organizations around the world.

"In addition to great technology and outstanding customer relationships, NES brings talented employees in sales, systems engineering, services, marketing and more," said Kennedy. "We believe our ability to innovate and develop solutions for customers to help them transform their businesses will continue to accelerate."

Today, Avaya begins to execute its plans to integrate the operations and customer care functions of the two organizations. The company expects to provide information about the new combined product portfolio and roadmap within the next 30 days.

"This is our second, large-scale business divestiture, and it represents significant progress on Nortel's plan to preserve the value of its innovation, while maximizing value through the sale of its businesses," said Pavi Binning, chief restructuring officer at Nortel. "The sale of our Enterprise Solutions business to Avaya enables customers to continue to benefit from Nortel-created technology, know-how and leading-edge innovation while also benefiting from the complementary capabilities offered by Avaya's portfolio of products and services. It also provides a path forward for more than 6,000 skilled employees who will now take their expertise to Avaya."

Nortel has received another extension of its ongoing protection from creditors. Also on Friday, Nortel said that a Canadian court had approved a 30-day extension through Jan. 29, 2010.

The firm filed for bankruptcy protection last January and received its first extension on Jan. 14.

“The purpose of the stay of proceedings is to provide stability to the Nortel companies to finalize funding arrangements and continue with their divestiture and other restructuring efforts,” Nortel said in a statement Friday.

The company is continuing to sell off assets as part of its liquidation process.

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