Monday, June 4, 2007

Avaya Accepts $8.2 Billion Buyout from Silver Lake, TPG

Avaya accepted an $8.2 billion buyout offer, or $17.50 per common share, from Silver Lake and TPG Capital, both private equity firms. The price represents a premium of approximately 33 percent over Avaya's average closing share price of $13.17 during the 30 trading days ending May 25, 2007.

The merger agreement provides for Avaya to solicit proposals from third parties during the next 50 days. In addition, the company may, at any time, subject to the terms of the agreement, respond to unsolicited proposals. There would be a break-up fee ranging from $80 million to $250 million depending on the timing of a counter proposal. The companies expect the deal to close in the fall of 2007, subject to receipt of shareholder approval and customary regulatory approvals.

Avaya has some 20,000 employees, including some 2,500 research and development professionals worldwide. The company is a leading supplier of enterprise IP telephony, call center and PBX solutions worldwide.

For its most recent fiscal quarter, Avaya's overall revenues increased 4.5 percent to $1.294 billion compared to $1.238 billion in the same period last year. Sales of products grew 8 percent year over year, led by a 15 percent increase in sales of converged voice applications. Net income was $57 million and earnings per share were 13 cents.

  • In October 2000, Avaya was spun off from Lucent Technologies and began trading on the New York Stock Exchange under the symbol AV.

  • Avaya is headed by Louis J. D'Ambrosio, who previously was SVP and President, Global Sales and Marketing at Avaya. Before that, D'Ambrosio spent 16 years at IBM in senior leadership roles across IBM Global Services, Software, and Sales and Marketing.

  • Silver Lake's investment portfolio includes, or has included, Ameritrade, Avago, Business Objects, Flextronics, Gartner, Instinet, IPC Systems, MCI, NASDAQ, Network General, NXP, Sabre Holdings, Seagate Technology, Serena Software, SunGard Data Systems, Thomson and UGS.

  • In August 2006, Silver Lake Partners joined Bain Capital, Apax Partners, Kohlberg Kravis Roberts & Co., and AlpInvest Partners to acquire an 80.1 percent stake in the Semiconductor Division of RoyalPhilips Electronics. Philips' semiconductor business is a leading supplier of silicon system solutions for mobile communications, consumer electronics, digital displays, contactless payment and connectivity, and in-car entertainment and networking.

  • In May 2007, TPG Capital and GS Capital Partners (Goldman Sachs) announced plans to privatize Alltel, , which is the fifth largest wireless carrier in the US serving 12 million customers, in a deal valued at $27.5 billion.