Extreme Networks to buy Avaya’s networking business

Extreme Networks is set to acquire Avaya’s Networking business for $100 million just months after the networking and collaboration company announced plans to seek Chapter 11 bankruptcy protection.

“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, 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 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 also said that the possibility of Avaya Networking being part of a pure-play networking company like Extreme Networks will allow greater opportunities for its products and services to thrive and the industry to continue to benefit from our award-winning wired, WLAN and Fabric technology.

“The addition of Avaya’s networking business is consistent with our growth strategy and will broaden Extreme’s enterprise solutions capabilities by complementing our product portfolio across our vertical markets,” said Ed Meyercord, President and CEO, 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’s fiscal 2018 earnings and cash flow.”

The sale process will be administered by the United States Bankruptcy Court for the Southern District of New York and governed by the United States Bankruptcy Code. 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 would set the floor value for the auction.  Approval of a final sale to either Extreme or a competing bidder is expected to take place shortly after completion of an auction.  The transaction is expected to close by 30th June 2017, the end of Avaya’s fiscal third quarter 2017, subject to regulatory approvals and other customary closing conditions.

“We are really excited to be a part of a larger pure-play networking brand. We strongly believe this development will be great for our systems integration business as it opens up a much larger market segment for us. Avaya has been a leader in the campus arena with its cutting edge Fabric Technology, while Extreme Networks leads in the consolidation and data centre segment. This purchase along with the recent acquisition of Zebra’s WLAN business unit makes Extreme Networks potentially the third largest networking company in the world. We are looking forward to the opportunities this opens for us,” said Manish Bakshi, Director, MDS PACC.

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