Avaya bags Nortel enterprise arm for $900m

Comms vendor beats off Siemens in auction, but Verizon remains unhappy at deal

Going, going, gone: Avaya has agreed to pay $900m, plus $15m for a staff retention scheme, to buy Nortel's enterprise unit

Avaya has triumphed in the race to acquire Nortel's enterprise business, winning the day with a $900m (£540m) bid.

The New Jersey-based comms vendor agreed a $475m stalking horse deal to acquire Nortel Enterprise Solutions in July, kicking off a bidding process. Siemens Enterprise Communications was thought to be Avaya's main rival, with other interested parties rumoured to include private equity firm MatlinPatterson

The final, decisive auction took place in New York on Friday with Avaya closing the deal for $900m, plus a $15m employee retention programme. Last week, carrier Verizon Communications tried to block Avaya's bid in a court filing which protested that the deal would compromise US national security.

Verizon is one of the Nortel unit's suppliers and the carrier claimed Avaya would not support its equipment, jeopardising numerous existing contracts with federal bodies. But, subject to court and regulatory approval in the US and Canada, Avaya has won the day.

Some onlookers have predicted antitrust issues could significantly delay the deal, although Nortel has indicated that it expects the deal to go through before the year's end.

Avaya chief executive Kevin Kennedy said: "Our successful bid brings us closer to adding Nortel and its complementary channel, portfolio, research and development, and global presence to Avaya.

"We believe the acquisition brings inherent value to both organisations’ customers, employees and partners, and we look forward to its successful conclusion."