Avaya bids for Nortel enterprise unit

The Nortel fire sale has attracted  Avaya as the lead bidder for the distressed Canadian vendor’s enterprise solutions division.

Canadian press reports claim that Avaya has put in a EURO355 million bid, however neither vendor has commented on the speculation.  Customers and channel partners have reportedly been informed of the impending buyout according to reports.

The enterprise solutions division is Nortel’s second-largest revenue earner but has struggled to maintain momentum. In the first quarter of 2009, revenue for the division slid by 41% to EURO 280  million in revenue, year on year while during fourth quarter 2008 it took a 30% hit in declining revenues dropping to EURO 380 million.

Last week Nortel announced that would sell its LTE and CDMA assets to Nokia Siemens Networks (NSN) for EURO 460  million, (US 650 million) representing the the first step in the breakup of the company.

“The company will assess other restructuring alternatives for these businesses in the event it is unable to maximize value through sales,” Nortel said in a statement.

CEO Mike Zafirovski said: “We have determined the best way to do this is to find buyers for our businesses who can carry Nortel innovation forward, while preserving employment to the greatest extent possible.”

Under the proposed deal, more than 2,500 Nortel staff – including 400 working on LTE – would transfer to NSN. It requires approvals from US and Canadian courts, which are expected to hear the case by the end of July.

Nokia Siemens Networks was also mooted as a potential buyer for the enterprise solutions division but the speculation surrounding a firm bid from Avaya is gaining the most traction from analysts. Avaya has also been extremely aggressive in the North American market is luring both Nortel channel partners and staff over to its camp.  

Analysts Oppenheimer & Co. said in a research paper that Avaya’s potential acquisition of the enterprise business would make it the largest VoIP player with 25% market share and a top four player in Layer 2 through 3 Internet switching market.