Troubled Avaya takes Extreme option, flogs network biz for $100m
Saving the furniture to burn later
Bankruptcy-beset Avaya is cashing out of its networking business for just $100m, with Extreme Networks the buyer.
Burdened by private equity debts bought at 2007-era interest rates, Avaya received Chapter 11 bankruptcy protection in January this year. Trying to cut a debt load of more than $6bn, Avaya briefly tried to offload its call centre products to Genesys last year, but in January ruled out that option.
Today, in a canned statement, president and CEO Kevin Kennedy said the portfolio Extreme is getting from Avaya at a knock-down price covers "wired, WLAN and fabric technology."
Australian analyst with IBRS James Turner said the transaction looks like a "fire sale," but Avaya's hoping it'll turn into an auction.
Now the deal is public, the bankruptcy proceedings allow other buyers to submit bids. In that case, Extreme Networks' offer will set the floor price.
In either event, the sale deadline is currently June 30, 2017.
The offload doesn't come as a surprise to The Register. We met Avaya – headquartered in Santa Clara, California – in late 2016 and were informed the biz was going all-in with unified communications. Doing so, we were told by the company’s Australian leadership, would enable it to develop deep, consultative engagements with customers. These presumably would be more lucrative than box drops done through the channel.
In that chat, Avaya's networking equipment business was mentioned as an afterthought.
Avaya is contacting customers in all territories to assure them the sale process won't change the support they receive in the meantime. ®