The US-based Avaya Inc has agreed to acquire the troubled Canadian equipment maker Nortel's enterprise business unit for $915 million.
Earlier in January, Nortel Networks Corp's certain subsidiaries in the US and Canada had filed for bankruptcy protection in the wake of global financial crisis.
Internet protocol based communication company, Avaya beat out Siemens Enterprise Communications for the Toronto-based telecom equipment vendor's enterprise business.
"Avaya Inc has emerged as the winning bidder agreeing to pay $900 million in cash to Nortel, with an additional pool of $15 million reserved for an employee retention program," Nortel Networks said in a statement today.
The deal will enable Nortel's customers "to compete in new ways with greater scale and resources", Nortel Enterprise Solutions President Joel Hackney said.
The acquisition will also make Avaya a more formidable competitor against rival Cisco Systems.
Nortel's principal operating subsidiary Nortel Networks and some of its other arms, including Nortel Networks Inc and Nortel Networks UK, have successfully concluded auction of all of the assets of Nortel's global Enterprise Solutions business as well as the shares of Nortel Government Solutions Incorporated and DiamondWare, the company said.
Both the companies have significant presence in India. Nortel's major clients in India include Reliance Infocomm, BSNL and BPL Mobile Communications, GAIL and Bharti Group.
The sale is subject to court approvals in the US, Canada, France and Israel as well as regulatory approvals, other customary closing conditions and certain post-closing purchase price adjustments.
Besides, Nortel would seek Canadian and US courts'nods for the proposed sale agreement at a joint hearing on September15. The sale close is expected late in the fourth quarter 2009.
"This is fantastic news for our customers, as this will empower us to continue to deliver industry-leading solutions and services focused on unlocking the enterprise business potential enabled by unified communications. It provides the capability to chart our future with laser-focus," Hackney said.
In addition, given the complementary strengths of the two companies in the US the combined operations are anticipated to yield a company best-suited to address the unique information technology requirements of the civil government and military.
Both firms would have opportunities to grow their business as the move to unified communications rises and the need for advanced services to design and manage such solutions expand.
