Avaya has emerged victorious from theprotracted bidding processfor Nortel's enterprise
unit, walking away with the prize after forking out $900m with an
additional pool of $15m for employee retention.
The deal includes Nortel's principle subsidiary Nortel Networks
Ltd, Nortel Networks Inc, Nortel Networks UK Ltd and shares of
Nortel Government Solutions Inc and DiamondWare Ltd.
The auction of the showcase unit was supposed to have been a
done deal last Friday, but as of Sunday evening 'undisclosed
issues' were holding up the process.
Nortel social media manager Bo Gowan, who has been keeping
audiences up to date on the auction via his
Twitter feed, said late
Sunday that the auction would resume on Monday morning, and this
process has now completed.
By the end of last week the number of bidders had been narrowed
down to two; Avaya, which bid $475m in a stalking horse deal, and
Siemens Enterprise Communications (SEC), which was keen to expand
its North American presence.
Avaya will benefit hugely from adding Nortel's assets to its
own; it would dearly love to mount a concerted challenge to Cisco.
The deal is also something of a family reunion, as both parties
trace their ancestry back to former North American comms behemoth
Bell.
However, US comms and mobile network provider and Nortel
reseller Verizon has publicly objected to the sale, although it is
unclear whether or not this is what held up the auction.
Citing concerns largely around public safety and security, the
firm claimed Avaya was refusing to honour contracts with Verizon
customers, which include the US military, anti-terrorism agencies
and the Congress.
"So integral are [Nortel's] CPE products and services to these
critical communications systems, in fact, that if they fail to
operate - due to a lack of maintenance or repair, the inability to
obtain spare parts or software fixes, or for some similar reason -
entire systems will immediately be disrupted or otherwise
compromised, and in due time may cease to function entirely," said
its lawyers.
Verizon was in negotiations with Avaya over its concerns last
week, and it is expected will now lodge formal objections to the
sale.
Avaya president and CEO, Kevin Kennedy, said: "Our successful
bid brings us closer to adding Nortel and its complementary
channel, portfolio, R&D and global presence to Avaya.
"We believe the acquisition brings inherent value to both
organisations' customers, employees and partners."
Nortel enterprise solutions president Joel Hackney added: "This
will empower us to continue to deliver industry-leading solutions
and services. It provides the capability to chart our future with
laser-focus, enabling customers to compete in new ways with greater
scale and resources."
Commenting on the implications for the Nortel channel, Rick
Dawybida, president of the US-based Nortel Distributor Alliance
Council said the channel was "excited" and he "looked forward to a
commitment focused on ensuring customers can fully leverage their
prior investments".
A version of this story originally appeared onMicroscope.co.uk