Avaya To Buy Nortel's Enterprise Solutions Operations For $475 Million

Avaya Inc. (AV) has signed agreements to purchase Nortel Networks Corp.'s (NRTLQ) enterprise solutions business for $475 million.

The proposed acquisition includes the Nortel Enterprise Solutions voice, data and government systems businesses.

The sale of Nortel's enterprise solutions business follows the sale last month of part of its carrier network division, together with a research operation, for $650 million to Nokia Siemens Networks, a joint venture between Nokia Corp. (NOK) and Siemens AG (SI).

At the time, analysts said the company set a low bar for future deals by selling its carrier network operations for the equivalent of a year's earnings from the unit.

As reported, Nortel's enterprise unit attracted preliminary bids of around $1 billion last year, before the company entered bankruptcy proceedings.

Avaya said it expects the acquisition will increase its global scale, expand its channel partner network, and strengthen its portfolio of products and services. The transaction is subject to a competitive bidding process and requires the approval of the U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice. Avaya expects that hearings before those courts to approve bidding procedures will be held within the next couple of weeks, followed by an auction, with hearings for approval of the ultimate sale to be held thereafter.

-By Tara Zachariah, Dow Jones Newswires; 416-306-2100; [e-mail]