Avaya looks set to buy Nortel enterprise business

Avaya looks set to buy Nortel after entering into a "stalking horse agreement" with the beleagured Canadian vendor. This means that Nortel will file the share sale agreement in a US Bankruptcy Court allowing other qualified bidders to submit better offers; the purchase price has been set at US$475(£287) million.

Reports surfaced last month that Avaya was preparing an offer for the business. The agreement includes the planned sale of substantially all of the assets of the Enterprise Solutions business globally as well as the shares of Nortel Government Solutions and DiamondWare, a maker of softphones.

Nortel CEO Mike Zafirovski said: "We continue to be fully focused on running our operations and continuing to serve our customers while actively engaged in the sale of our businesses. We have determined that the sale of our businesses maximises value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible. The CDMA and LTE Access stalking horse asset sale agreement announced on 19 June, and today's agreements around our Enterprise business are solid proof of that value. This represents the best path forward, and we are advancing in our discussions with interested parties for our other businesses.

"The many customers I have spoken with have been highly supportive of our efforts and transparency throughout this process. They value our employees and technology platforms and are appreciative of our service levels which are at multi-year highs.

"Today's agreements underscore the value of Enterprise Solutions and the investments we have made in enterprise telephony, unified communications and data networking core competencies. If successfully completed, 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."

The International Nortel Networks Users Association (INNUA), which represents more than 4,000 Nortel enterprise customers worldwide, issued a statement saying that it "believes the acquisition will allow the company to refocus its energy and resources on its solutions, and quiet concerns about the corporate structure that has beleaguered the company."

"This chapter in Nortel's history is closed," said INNUA Executive Director Victor Bohnert. "We understand that there is still much that can change during the auction process. However, we will begin working with Avaya as soon as it's appropriate to determine how we can best represent the collective voice of their new customers."