Private Equity Firms to Pay $8.2-Billion for Avaya Inc.

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Private Equity Firms to Pay $8.2-Billion for Avaya Inc.

6:35 am on June 6, 2007 | Category: Business, VoIP, Corporate

Avaya Inc., a leading supplier of corporate networking equipment, has tentatively agreed to an acquisition by private equity firms, Silver Lake Partners and TPG Inc, at a price of US$8.2 billion.

The private equity groups will pay $17.50/share for the Basking Ridge, New Jersey-based company – 4.7% above Monday’s closing price, and 28% more than the stock was worth before acquisition rumours surfaced last week.

“In addition to delivering compelling value for our shareholders, the partnership with Silver Lake and TPG … creates clear value for Avaya employees and customers,” commented Avaya president and CEO, Louis J. D’Ambrosio, in a statement. “The investment in our people and technology and the operating structure will enable us to extend our technology and services leadership and continue to deliver the ‘gold standard’ of communication solutions in the industry.”

Avaya is still allowed to solicit additional bids for the next 50 days, but analysts are expecting the Silver Lake/TPG offer to stick, with a likely closing date sometime this fall.

This is one of several recent forays into tech and telecom by America’s private equity sector, which successfully bought out Acxiom Corp, Alltel Corp., and CDW Corp. last month. U.S. equity firm, Kohlberg Kravis Roberts & Co., meanwhile, is participating in a pending bid for Canada’s top telecom provider, BCE Inc.