Nortel Confirms Avaya Buying its Enterprise Solutions Division

Nortel has confirmed that Avaya is to be the buyer of its global Enterprise Solutions business after paying US$900 million in cash to Nortel, with an additional pool of US$15 million reserved for an employee retention program. The transaction also includes the shares of Nortel Government Solutions Incorporated and DiamondWare, Ltd.

The sale was originally announced in July, for US$475 million but allowed for counter-bids to be submitted from other companies. Although no details were given the rise in the price being paid indicates that other parties were submitting bids for the division.

Commenting on the announcement, Nortel Enterprise Solutions President Joel Hackney said "This is fantastic news for our customers, as this will empower us to continue to deliver industry-leading solutions and services focused on unlocking the enterprise business potential enabled by unified communications. It provides the capability to chart our future with laser-focus, enabling customers to compete in new ways with greater scale and resources. We look forward to working closely with our customers, partners and stakeholders during this pre-close phase to ensure that we continue to innovate to meet customers' needs with high-performance, efficient and secure communications solutions.

While today's auction is a significant step in the overall sale process, it is not the final step. Nortel will work with Avaya to close the sale later this year, subject to the timing of regulatory approvals. Nortel will seek Canadian and U.S. court approvals of the proposed sale agreement at a joint hearing on September 15, 2009. The sale close is expected late in the fourth quarter 2009. In some EMEA jurisdictions this transaction is subject to information and consultation with employee representatives.

As previously announced, the Company does not expect that its common shareholders or the preferred shareholders of Nortel Networks Limited will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.

Posted to the site on 14th September 2009