Telecom equipment provider Avaya plans debt buyback: Sources

NEW YORK: Avaya Holdings, a software and telecommunications software company, is considering a leveraged buyout offer from a private equity firm worth more than $ 5 billion, including debt, announced on Sunday ( March 24) people familiar with the subject.

The takeover bid comes 15 months after the exit of Avaya's bankruptcy protection, inherited from a previous debt buyback, its US $ 8.3 billion sale to private equity firms TPG Capital and Silver Lake in 2007.

Avaya's board of directors is currently evaluating an offer from a private equity firm that is worth more than $ 20 per share, the sources said. Avaya shares closed Friday at 13.21 US dollars, with a market capitalization of 1.5 billion US dollars. The company also had $ 3.2 billion in debt at the end of December.

The identity of the private equity firm making the offer could not be learned immediately. Avaya has attracted private equity firms' interest in acquisitions in recent months, and there is no certainty that the latest offer will result in an agreement, sources said.

The sources asked not to be identified because the case is confidential. Avaya did not immediately respond to a request for comment.

Based in Santa Clara, California, Avaya is one of the world's largest providers of telephony systems. It was derived from Lucent Technologies in 2000, which was formerly part of AT & T.

Avaya, which competes with Microsoft Corp and Cisco Systems, is trying to strengthen its business communications software delivery business, as its hardware business has become more commonplace and obsolete. It has also sought to expand its cloud communication solutions offering.

Software and services accounted for 83% of Avaya's revenue of US $ 738 million in the three months to December. This amounted to 752 million US dollars the year before. The company blamed low profits on exchange rates and the partial shutdown of the US federal government.

Operating profit was $ 50 million compared to $ 38 million a year ago.

Avaya's contact center business, which drives customer service and sales activities for some of the world's largest companies, has also attracted interest from private equity firms such as Clayton Dubilier & Rice LLC, Hellman & Friedman LLC and Permira Advisers LLP. Hellman & Friedman and Permira own Genesys Telecommunications Laboratories, a US provider of call center software.