Avaya agrees to buy Nortel's enterprise arm

Breaking up is hard to do: Nortel continues to sell off its business units

Embattled communications vendor Nortel has agreed to sell off its Enterprise Solutions business to rival Avaya for $475m.

The two companies have entered into a stalking horse agreement which will permit other parties to make bigger bids for Nortel's North American, Caribbean, Asian and Latin American enterprise operations. Avaya has also agreed an asset sale agreement for Nortel's EMEA Enterprise Solutions arm.

The agreements cover the sale of substantially all the global assets of the Canadian firm's enterprise operations. Shares in the vendor's Government Solutions unit and those in software developer DiamondWare, which Nortel acquired last summer, are also covered.

Nortel's UK joint administrators have the power to act on Nortel's behalf and enter into the EMEA asset sale agreement. In certain EMEA jurisdictions such a transaction will be subject to consultation with employees and their representatives before the terms can be finalised.

Joel Hackney, president of the vendor's Enterprise Solutions wing, said: " Enterprise Solutions has strong relationships with key customers and partners around the world and we have helped them achieve industry-leading differentiation and competitive advantages. We remain committed to serving them without interruption through this process and, as we move forward, we pledge to communicate our progress to the greatest extent possible."

Last month Nortel agreed a $650m stalking horse deal with Nokia Siemens Networks for its CDMA and LTE Access businesses. Nortel chief executive Mike Zafirovski said: "We have determined that the sale of our businesses maximises value, while preserving innovation platforms, customer relationships and jobs to the greatest extent possible."

Avaya chief executive Kevin Kennedy added: "The addition of Nortel Enterprise Solutions will increase Avaya's global scale, expand our channel partner network, and strengthen our world-class portfolio of products and services. This is a strategic opportunity to acquire talent and complementary assets that position the combined company for growth and success.

"We are committed to protecting the communications investments of the customers of Avaya and Nortel, and to effectively executing the integration of Nortel Enterprise Solutions and Avaya."