US telecommunications equipment maker Avaya increased
its presence in Europe by acquiring German enterprise
communications supplier Tenovis for $635m (£357m).
The deal will strengthen Avaya's sales and service presence in
Europe, especially in Germany, according to Lynn Newman, an Avaya
spokeswoman.
Tenovis will be integrated into Avaya, but no decision has been
made on staffing levels or on the branding of Tenovis' products,
she said.
Avaya will pay approximately $370m in cash and assume about
$265m in debt. It will acquire Tenovis from affiliates of private
equity firm Kohlberg Kravis Roberts, according to a company
statement.
After the companies are integrated, Avaya expects Tenovis to
contribute about $1bn in annual revenue.
Both companies play in the growing market for IP (Internet
Protocol) telephony, in which voice calls are converted to data
packets and sent over a carrier data network or enterprise Lan.
Tenovis provides enterprise communications systems and services
for midsized companies and has about 200 customers throughout
Europe, the Middle East and Africa, Newman said.
The company has 5,400 employees in Europe, primarily in Germany.
Avaya has approximately 15,000 employees worldwide but only about
1,700 in Europe, she said. After the acquisition, Avaya expects its
European revenue to grow from 12% to 30% of its worldwide
business.
The acquisition is subject to standard regulatory approvals and
closing conditions, and Avaya will not project when the deal will
close, Newman said.
Avaya was spun off from Lucent Technologies in 2000.
Frankfurt-based Tenovis was founded in 1899 as a telephone system
rental business, according to a company statement.
Tenovis offers a wide array of products including IP telephony,
call centre and unified messaging systems, as well as managed
services for planning, financing, provision and operation of
information and communication technology.
Growth prospects for IP telephony are at least as good in Europe
as in North America, according to Frank Dzubeck, president of
consulting company Communications Network Architects.
Avaya leads the world in call centre technology, which is being
transformed by IP technology, he said. A greater presence in Europe
will be a boost for Avaya, especially with the potential for IP
call centres in Eastern Europe, Dzubeck said.
Avaya in April agreed to buy a large stake in Tata Telecom,
based in New Delhi, which gave the company a strong channel in the
booming call centre industry in India.
The company especially needs to expand its support organisation
to compete overseas, because IP call centres, which can be
distributed across multiple locations, tend to require more
employee training and support work, he said.
"Avaya's been pretty good with call centers ... but with IP
telephony, you need a much more significant presence," Dzubeck
said. "The deal they made was extremely beneficial for them in
terms of broadening their scope."
Stephen Lawson writes for IDG News Service