Avaya will pay $900 million for Nortel

Avaya will pay $900 million for Nortel’s Enterprise Solutions business unit after winning the latest bidding war for pieces of the shattered telecoms giant.

An additional $15 million has also been earmarked for staff retention bonuses, news which is likely to lighten the spirits of Nortel’s beleaguered staff.

The total amount is almost double Avaya’s initial bid of $475 million, made in July.

“Our successful bid brings us closer to adding Nortel and its complementary channel, portfolio, research and development, and global presence to Avaya,” said the company’s CEO, Kevin Kennedy.

The acquisition awaits final approval from courts and regulators in Canada and the US. When that happens, Avaya will overnight become the gorilla of the worldwide unified communications market, more than twice the size of its nearest competitors.

Avaya narrowly escaped being acquired by Nortel itself as recently as 2007. The then-struggling VoIP equipment manufacturer was snapped up from under Nortel’s nose by private funds TPG Capital and Silver Lake, in an $8.2 billion deal many in the telecoms industry now consider poetic.

Last month, Silver Lake acquired a controlling stake in consumer VoIP service Skype from auction website eBay. Avaya’s acquisition of Nortel’s enterprise assets arguably gives the private equity firm the VoIP industry’s strongest hand. Silver Lake’s managing director Charles Ginacarlo used to be head of networking giant Cisco development division.

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