Avaya considering tie-up with RingCentral to save it from fire sale – report

Comms kit vendor in talks with videoconferencing outfit about possible joint venture

Troubled telecoms provider Avaya has hit pause on plans to find a buyer amid reports it may enter into a joint venture with videoconferencing provider RingCentral instead.

The business, which emerged from bankruptcy two years ago, put itself up for sale earlier this year after a particularly bad set of Q2 results.

However, sources told Bloomberg that Avaya is now leaning toward a tie-up with communication systems provide RingCentral.

The news outlet reported Avaya had been locked in talks with private equity firms such as Searchlight Capital, which owns Mitel Networks, about a reverse merger.

A representative for RingCentral declined to comment.

In its third-quarter results last month (PDF), Avaya reported a net loss of $633m, down slightly from losses of $637m for the same quarter in 2018. Revenue edged up to $717m from $692m for the same period in 2018.

At the time (13 August 2019), chief exec Jim Chirico said he expected the outcome of the firm's strategic review to be concluded within 30 days.

However, Avaya has now confirmed that its "review of a range of strategic alternatives" has been extended and it "remains in advanced discussions".

The company remained tight-lipped as to when it would formally wrap up discussions. "There can be no assurances regarding the timing of any action or transaction nor that the strategic review process will result in any particular outcome," it said. "The Company does not intend to provide additional updates unless or until it determines that further disclosure is necessary."

Meanwhile, shares dropped 13 per cent to $11.35. Phillip Carse, analyst at Megabuyte, noted that is 33 per cent below their value at the December 2017 emergence from Chapter 11 bankruptcy protection. ®

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