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Extreme Networks announces $100 M bid for Avaya’s networking business

Extreme Networks announces $100 M bid for Avaya’s networking business

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Ed Meyercord, President and CEO of Extreme Networks.

Avaya announced it has entered into an asset purchase agreement with Extreme Networks, under which Extreme Networks will serve as the primary bidder in a section 363 sale under the Bankruptcy Code to acquire Avaya’s Networking business for a transaction value of approximately $100 million, subject to adjustments.

“Several months ago, in the context of optimising our capital structure, we announced that we were conducting a comprehensive assessment of the various alternatives available to us, including expressions of interest in certain Avaya assets,” said Kevin Kennedy, President and CEO of Avaya.

“After extensive evaluation, we believe that a sale of our networking business is the best path forward for all stakeholders. It provides a clear and positive path for our networking customers and partners and enables the company to focus on its core, industry-leading unified communications and contact centre solutions. Today’s announcement furthers our overall restructuring goals as we position the rest of Avaya for long-term success.”

Kennedy continued, “The possibility of Avaya networking being part of a pure-play networking company like Extreme Networks would allow greater opportunities for its products and services to thrive and the industry to continue to benefit from wired, WLAN and Fabric technology.”

“The addition of Avaya’s networking business is consistent with our growth strategy and will broaden Extreme Networks’ enterprise solutions capabilities by complementing our product portfolio across our vertical markets,” stated Ed Meyercord, President and CEO of Extreme Networks.

“Furthermore, we expect the Avaya business to generate over $200 million in annual revenue, increase our market share and offer new opportunities for our customers. Although our agreement is subject to required approvals, the timing of which is uncertain, we expect the combined businesses can achieve synergies and provide accretion to Extreme Networks’ fiscal 2018 earnings and cash flow.”

Other interested parties will be provided the opportunity to submit bids prior to a deadline set by the Bankruptcy Court. If other qualified bids are submitted, an auction process will be conducted, in which the agreement with Extreme Networks would set the floor value for the auction.

As the stalking horse bidder, Extreme Networks will be entitled to a break-up fee and expense reimbursement, if it ultimately does not prevail as the successful bidder at the required auction for Avaya’s assets. Approval of a final sale to either Extreme Networks or a competing bidder is expected to take place shortly after completion of an auction. The transaction is expected to close by June 30, 2017, the end of Avaya’s fiscal third quarter 2017, subject to regulatory approvals and other customary closing conditions.

Over the past several months, Extreme Networks has been evaluating the technology, go-to-market strategy and customers of Avaya Networking. After close review of the potential combination and impact on Extreme Network’s growth strategy, Extreme Networks negotiated and executed an Asset Purchase Agreement with Avaya to acquire its networking business in an auction process as part of Avaya’s reorganisation process in bankruptcy court.

Extreme has now filed its intention to acquire all of the assets of Avaya’s networking business.

Avaya Networking has not yet delivered standalone-audited financials for the business but is expected to yield annual revenues in excess of $200 million. Extreme Networks believes there are potential financial synergies and complementary products between the two businesses across Extreme Network’s vertical markets.

Extreme Networks’ customers and partners will have access to Avaya’s pioneering and award-winning switching fabric technology for highly secure, simplified access, management and control of their datacentre, core and edge switching environments. Extreme Networks delivers software-driven networking solutions that help IT departments everywhere deliver business outcome.

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