Private Equity Firms Buy Avaya for $8.2 Bln

Following up on persistent rumors the company might be for sale, telecom equipment maker Avaya is being bought by private equity firms for $8.2 billion.

Following persistent rumors the company might be for sale, telecom equipment maker Avaya announced today it is being acquired by private equity firms Silver Lake and TPG Capital for some $8.2 billion.

"After an extensive review of Avaya’s strategic alternatives with Avaya management and our financial advisors, the board of directors of Avaya determined that this transaction with Silver Lake and TPG provides the best value for Avaya’s shareholders," said Phil Odeen, non-executive chairman of Avaya’s board of directors.

Silver Lake and TPG were known to be contenders for Avaya; other bidders includes Nortel Networks and Cisco Systems, according to reports in the Wall Street Journal.

Avaya was spun off from Lucent in 2000, but the acquisition does not represent a bail-out of a troubled company: Avaya’s market capitalization is over $6 billion, and it posted a $220 million profit for its 2006 fiscal year. Instead, the acquisition is an indicator of the market interest in the sort of gear Avaya makes: equipment which routes voice, data, and video across far-flung networks. Telecom operators, software developers, and communications providers are all deeply interested in Avaya’s asset as a component toward providing "unified" business communications, combining data, voice, instant messages, video conferecing, and telephony into a seamless application.

The deal is expected to close in late 2007.