Avaya agrees to US$8.2bn takeover

Avaya has ended weeks of speculation by announcing it has agreed to be taken over by investment firms Silver Lake and TPG Capital.

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By  Michele Howe Published  June 5, 2007

Avaya has ended weeks of speculation by announcing it has agreed to be taken over by investment firms Silver Lake and TPG Capital.

The telephone equipment maker said late last night that it had entered into a merger agreement with the two companies for approximately US$8.2 billion.

Avaya president and CEO Louis D'Ambrosio said the move would spur the development of the firm.

"In addition to delivering compelling value for our shareholders, the partnership with Silver Lake and TPG also creates clear value for Avaya employees and customers," he said.

"The investment in our people and technology and the operation structure will enable us to extend our technology and services leadership and continue to deliver the "gold standard" of communication solutions in the industry," he added.

The announcement brings to an end speculation over the future of the US telecom equipment maker, which, as previously reported by ITP.net, was recently pinpointed by analysts as a ‘perfect' opportunity for a takeover.

The purchase of Avaya by Silver Lake and TPG Capital continues an upward trend in investment by private equity firms in technology companies, and follows TPG Capital and GS Capital Partners recent acquisition of US wireless provider Alltel for US$27.5 billion.

Network firms Nortel and Cisco were also rumoured to have looked at Avaya, although these reports are unconfirmed.

Created in 2000 as a spin-off from Lucent Technologies, Avaya is a key competitor of Cisco in the internet protocol (IP) telephony market.

The takeover could still be challenged, however. The agreement includes a clause providing for Avaya to solicit proposals from third parties during the next 50 days. In addition, the company may respond to unsolicited proposals.

The transaction is slated for completion in the fall of 2007, subject to shareholder and regulatory approval.

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