Extreme Networks to acquire Avaya's Networking business for $100m

Extreme Networks to acquire Avaya's Networking business for $100m
Avaya says the sale of its Networking business to Extreme Networks is the best path forward for all stakeholders.
Published: 8 March 2017 - 3:53 a.m.
By: Manda Banda

Extreme Networks is set to buy Avaya's Networking business for $100m just months after Avaya said it was seeking Chapter 11 bankruptcy protection.

Extreme Networks president and CEO Ed Meyercord said he expects Avaya's networking business to generate over $200m in annual revenue for his company.

"The addition of Avaya's networking business is consistent with our growth strategy and will broaden Extreme's enterprise solutions capabilities by complementing our product portfolio across our vertical markets," stated Meyercord. "Furthermore, we expect the Avaya business to generate over $200 million in annual revenue, increase our market share and offer new opportunities for our customers.

He added that although the agreement is subject to required approvals, the timing of which is uncertain, the company expects the combined businesses can achieve synergies and provide accretion to Extreme's fiscal 2018 earnings and cash flow.

Kevin Kennedy, president and CEO of Avaya, said: "Several months ago, in the context of optimising our capital structure, we announced that we were conducting a comprehensive assessment of the various alternatives available to us, including expressions of interest in certain Avaya assets.

Kennedy explained that: "After extensive evaluation, we believe that a sale of our Networking business is the best path forward for all stakeholders. It provides a clear and positive path for our Networking customers and partners and enables the company to focus on its core, industry-leading unified communications and contact centre solutions.  Today's announcement furthers our overall restructuring goals as we position the rest of Avaya for long-term success."

He added that the possibility of Avaya Networking being part of a pure-play networking company like Extreme Networks would allow greater opportunities for its products and services to thrive and the industry to continue to benefit from the award-winning wired, WLAN and Fabric technology.

The sale process will be administered by the United States Bankruptcy Court for the Southern District of New York and governed by the United States Bankruptcy Code. Other interested parties will be provided the opportunity to submit bids prior to a deadline set by the Bankruptcy Court.

If other qualified bids are submitted, an auction process will be conducted, in which the agreement with Extreme would set the floor value for the auction. Approval of a final sale to either Extreme or a competing bidder is expected to take place shortly after completion of an auction.

The transaction is expected to close by June 30, 2017, the end of Avaya's fiscal third quarter 2017, subject to regulatory approvals and other customary closing conditions.

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