The dismemberment of Nortel continues at a brisk pace. Today the Canadian based equipment maker announced it has found a buyer for its Enterprise solutions business, which makes phone systems for office use. Avaya will buy the EMEA portion in an asset sale for $475M. The company will also become the stalking horse bidder on the American (North and South) portion. Strictly speaking, that means that there will be an auction and Avaya gets to bid first, but they can be outbid.
I'm not entirely clear why they are doing this in two parts via two completely different sales processes to the same company. It seems to be simply that UK or European BK laws allow the direct asset sale while the US or Canadian ones don't, and if they had the choice they'd probably just sell it all to Avaya right off the bat. However, BK court is a strange place, and adding an international just multiples that strangeness.
Avaya's appearance in this deal doesn't seem to have surprised anyone, it has been rumored for weeks. Yet it does seem likely to make some waves in the sector, the balance of power threatens to shift. Is another bidder likely to appear for the assets in the western hemisphere? The capital markets may have improved, but not so much that cash is growing on trees. Avaya has the means and the other half of the business already, if anyone were going to make that challenge I suspect they might have done so already. Nevertheless, the fat lady hasn't sung yet.
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