Avaya has entered into an asset purchase agreement with Extreme Networks where Extreme will acquire Avaya’s networking business for about $100 million. That price is subject to adjustments.
Extreme is the primary bidder for Avaya’s networking business in a bankruptcy auction. Extreme believes that Avaya’s networking business will generate a minimum of $200 million in revenue in fiscal 2018, according to its announcement yesterday.
Avaya filed for Chapter 11 bankruptcy protection in January. At the time, the company had $6 billion in debt — the residue from going private in 2007 — and company officials said they believed the company wasn’t built to compete in the future of IT.
From a technology perspective, Extreme expects to bring in Avaya’s fixed and modular switching and software licensing capabilities, said Ed Meyercord, CEO of Extreme Networks, on a conference call about the deal. The Avaya assets will help Extreme level the playing field against competitors like Cisco and HPE.
“We see a terrific fit with Avaya’s networking business and believe Extreme is uniquely positioned to leverage these assets from a strategic and operating perspective,” said Meyercord. “We are targeting similar market segments, verticals, and customers, and we have complimentary products and solutions portfolios.”
The sale process will be administered by the United States Bankruptcy Court for the Southern District of New York and will be governed by the United States Bankruptcy Code. Other interested parties will be able to submit bids on the business, and if other qualified bids are submitted, an auction process would be conducted with Extreme setting the base value for the auction.
“We are not aware of other bidders at this stage, but it is too early to say whether or not other bidders will emerge in the process,” Meyercord said on the call. The transaction is expected to close by June 30, the end of Avaya’s fiscal third quarter 2017.