Avaya cancels meeting, fuels buyout speculation

Avaya could be in line for a takeover, with the telephone equipment maker cancelling a meeting with analysts scheduled for this week.

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By  Michele Howe Published  May 27, 2007

Avaya could be in line for a takeover, with the telephone equipment maker cancelling a meeting with analysts scheduled for this week. The US-based firm, the largest supplier of corporate phone equipment, last week said it was postponing the meeting, without giving a reason or rescheduling the event, a report on Bloomberg said. The report added that, according to investment firm Merrill Lynch, Avaya would be a “perfect candidate” for a leveraged buyout by private equity firms, following the US$27.5 billion purchase of US wireless provider Alltel by TPG Capital and GS Capital Partners. Nidal Abou-Ltaif, managing director of Middle East and North Africa for Avaya, said he was aware of the report but was unable to comment on takeover rumours at this stage. Telecom analyst, Marc Hammoud of Dubai-based investment bank Shuaa Capital, said such a deal would not be a surprise. “As telco operators are investing a lot in next generation networks (IP-based networks) and are more and more focusing on the corporate segment (especially in the Middle East region because this is where they find more value), it makes Avaya a perfect target,” he said. Avaya was created in 2000, as a spin-off from Lucent Technologies. It now competes heavily with Cisco in the internet protocol (IP) telephony market. Avaya recorded US$205 million in operating cash flow for the second fiscal quarter of 2007 in comparison to US$169 million in the second quarter of 2006. Net income for the second quarter of 2007 climbed to US$57 million up from US$38 million in the second quarter of 2006, the company said in April.

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