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Nortel's $915M Deal with Avaya

Sale Came After a Three-Day Auction
Kenneth A. Lefkowitz, Michael Luskin, Derek J. T. Adler, Avner Ben-Gera, James H. Bluck, Steven J. Greene, Michael E. Salzman

Hughes Hubbard represented the administrators for Nortel Networks Europe, Middle East and Africa in the liquidation and assets sale of Nortel Networks Corp.’s Enterprise Solutions business to Avaya Inc. The $915 million deal was approved at a hearing today.

Nortel, the Canadian telecommunications equipment maker operating under Chapter 11 protection, agreed to sell its enterprise network business, its second largest division, to Avaya after a three-day auction that began on Friday. The sale price was nearly double the offer Avaya initially made.

The deal includes $15 million for an employee retention program. Under the terms, Avaya, a New Jersey-based telecommunications company, will also acquire shares of Nortel Government Solutions Inc. and DiamondWare, Ltd.

Avaya, a privately held company owned by affiliates of Silver Lake and TPG Partners, makes network equipment such as routers, internet protocol phones, switches and related security products for large companies, covering the same ground as Enterprise Solutions. According to the Financial Times, one of numerous outlets to cover the transaction, Avaya “had previously made a $475m ‘stalking horse’ offer for the enterprise unit, Nortel’s second-largest by revenues.”