Nortel aims to sell enterprise business to Avaya for $475m

Nortel agrees sale to Avaya of Enterprise Solutions Business

Troubled networking vendor Nortel wants to sell part of its business to rival Avaya.

The Canadian firm, which is currently under US Chapter 11 bankruptcy protection, announced an asset sale agreement with Avaya to sell its Enterprise Solutions business for $475m (£288m).

Since Nortel is currently under US Creditor Protection – known as Chapter 11 – part of the the sale has to go through a court-approved bidding process known as a "stalking horse" or 363 sale, the number referring to the requisite section of the US Bankruptcy Code.

The North American, Caribbean and Latin America (CALA) and Asia Enterprise Solutions business is subject to the asset and share sale agreement with Avaya, while the requirement for the Europe, Middle East and Africa portion of the company is simply an asset sale agreement.

The proposed acquisition includes the Nortel Enterprise Solutions voice, data and government systems businesses.

Forrester research analyst Henry Dewing said the agreement would put Avaya ahead of Cisco for enterprise voice sales and enter the firm into the networking business.

"There are also opportunities for customers to have a global vendor offering hardware, software, and services to advance their communications and collaboration capabilities," said Dewey.

Nortel president and chief executive Mike Zafirovski said: "The CDMA and LTE Access [mobile communications] stalking horse asset sale agreement announced on 19 June 19, and today’s agreements, represents the best path forward, and we are also in discussions with interested parties for our other businesses.”

The sale is expected to close by the end of the year, but due to the complex process involving bidding, and getting government, administrator and court approvals, as well as other conditions, a definitive timeframe was not released.