Extreme confirms purchase of bankrupt Avaya’s networking business

Alan Burkitt-Gray
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Auction of Avaya networking business leads to no increase in $100m price forecast in March

Extreme Networks has confirmed the deal to pay $100 million for the networking business of Avaya Networks, but expects the takeover will “yield annual revenues in excess of $200 million”.

Avaya filed for bankruptcy protection in January, with debts of $6.3 billion. Private equity groups Silver Lake and TPG Capital bought Avaya in 2007 for $8.2 billion, but Avaya took out loans after the deal and had to pay $400 million a year in interest. The company was created 20 years ago from the office equipment business of Lucent, and added bankrupt Nortel's office equipment business in 2009 after a $900 million acquisition. 

Marc Randall, head of the networking unit of Avaya, said: “This is great news. The Avaya networking business will become part of a company exclusively focused on networking and addressing the needs of our networking customers.”

In March Extreme bought Brocade’s data centre networking business for $55 million, saying that it would generate more than $230 million in revenue.

The Avaya deal is an asset purchase agreement by which Extreme bought the operations in an auction. No other company is known to have participated in the auction, and the $100 million price is as forecast nearly three months ago. The bankruptcy court will look after the restructuring of the rest of Avaya.

Extreme said its “delivers differentiated software driven networking solutions to our enterprise campus customers in target verticals. Avaya Networking’s technology, heritage and enterprise campus focus complements Extreme’s strategy.”

It added: “Extreme customers and partners will have access to Avaya’s pioneering and award-winning switching fabric technology for highly secure, simplified access, management and control of their data centre, core and edge switching environments.”