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Avaya buys Nortel enterprise business

Alex Scroxton

Avaya is to buy Nortel's enterprise unit for $475m, ending weeks of rampant speculation and sealing the bankrupt vendor's fate once and for all.

The agreement covers Nortel Networks Limited, Nortel Networks Inc and Nortel Networks UK Ltd, and takes the form of a stalking horse deal in the Americas and Asia, while the EMEA business will be sold in an asset sale agreement.

For its money, Avaya also gets its hands on Nortel's US public sector business Nortel Government Solutions Ltd and Arizona-based VoIP software developer DiamondWare.

"We have determined that the sale of our businesses maximises value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible," said Nortel CEO Mike Zafirovski.

"This transaction will provide clarity on the path forward for our enterprise customers, partners and employees, and enable the industry to continue to benefit from Nortel-created technology, know-how and leading edge innovation," he added.

Avaya CEO Kevin Kennedy also weighed in, saying: "This is a strategic opportunity to acquire talent and complementary assets that position the combined company for growth and success. We are committed to protecting the communications investments of the customers of Avaya and Nortel."

The stalking horse deal sets a baseline inviting higher bids that Avaya may then attempt to match or better, and will end in a court-mandated auction in the near future. However in Britain administrators Ernest & Young have the go-ahead to sell off Nortel assets to Avaya without further court approval.

It is not known how many UK jobs will be put at risk as a result of the move.

The deal is likely to be welcomed in the channel, where Nortel partners had been struggling for months to win new business, while Avaya's resellers are looking forward to picking up some of Nortel's vast UK installed base.

Later in the week the courts are widely expected to green light the sale of Nortel's wireless business to Nokia Siemens Networks, pending a last-minute intervention by creditors.

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