Nortel eyes up Avaya

30 May 2007

Telecoms equipment manufacturer Avaya is in talks with private equity and strategic bidders about selling, with Canadian tech giant Nortel tipped as the most likely buyer.

Avaya, which has a market cap of US$6.1bn, had already been in talks with Nortel but the two sides failed to agree a price or whether the deal would be funded by cash or stock.

Although Avaya is currently in talks with private equity firm Silverlake, a deal between Avaya and Nortel could still materialise.

Other interested suitors for Avaya include Cisco Systems and German engineering powerhouse Siemens.

Avaya has for a long time been an attractive takeover target due to its small size and the growing importance of internet protocol (IP) communications.

The company employs 170 people in Ireland, of which 110 are engaged in research and development (R&D).

Avaya acquired Irish video conferencing company Spectel in 2004 in a US$103m all-cash transaction. The company’s Irish customer base includes large enterprises like Bank of Ireland, Conduit, Ulster Bank, O2, IBM and a large number of small to medium-sized enterprises.

The most likely bidder for Avaya, Nortel, employs around 300 people in Galway, largely engaged in R&D and in recent weeks the company opened its Global Customer and Technology centre following a US$5m investment.

By John Kennedy