Extreme grabs Avaya’s networking business for $100M
Extreme Networks continued to expand its enterprise networking portfolio today buying up the network technology of Avaya Holdings– which is in Chapter 11 bankruptcy — for $100 million.
Extreme’s Ed Meyercord, President and CEO said he expects the deal will broaden the company’s software and strengthen its presence in vertical markets such as healthcare and manufacturing.
Norman Rice, an executive vice president with Extreme added that some of Avaya’s strengths included its networking fabric and Network Micro-Segmentation technology that helps customers secure enterprise components.
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Meyercord said of the deal: “We expect the Avaya business to generate over $200 million in annual revenue, increase our market share and offer new opportunities for our customers. Although our agreement is subject to required approvals, the timing of which is uncertain, we expect the combined businesses can achieve synergies and provide accretion to Extreme’s fiscal 2018 earnings and cash flow.”
Because the deal or sales process will be administered by the United States Bankruptcy Court for the Southern District of New York and governed by the United States Bankruptcy Code, other interested parties could submit bids prior to a deadline set by the Bankruptcy Court.
“If other qualified bids are submitted, an auction process will be conducted, in which the agreement with Extreme would set the floor value for the auction. Approval of a final sale to either Extreme or a competing bidder is expected to take place shortly after completion of an auction. The transaction is expected to close by June 30, 2017, the end of Avaya’s fiscal third quarter 2017, subject to regulatory approvals and other customary closing conditions,” Extreme stated.
There are no other bids as far as Extreme knows, the company said during a conference call after then purchase announcement. But if another bid were to be entered Extreme could counter it and in the end if it lost out, Extreme would be entitled to a $3 million break-up fee plus and additional $750,000, the company stated.
The deal would also bring Avaya’s Wireless LAN products which might bring a potential for major overlap with Extreme.
Last September Extreme bought Zebra Technologies wireless business for $55 million in cash to fill in some gaps in its own wireless LAN portfolio – such as security and managed services — and jump into some new vertical markets like retail and transportation,
With that purchase, Extreme got Zebra’s wireless LAN 802.11ac high-speed wireless access portfolio, which includes Zebra’s WiNG wireless operating system, NSight advanced network troubleshooting package as well as a managed service suite that Extreme did not offer.
The Zebra buy was just the latest piece of a rapidly changing and shrinking wireless LAN vendor environment. In the past couple years, HP bought Aruba, Fortinet grabbed up Meru and most recently Brocade nabbed Ruckus which has now been sold to Arris.
Avaya has a varied history as it was spun from Lucent Technologies in 2000. It went private in 2007 and bought Nortel technology in 2009.
Extreme acquired Enterasys in 2013 and continues to grow and compete effectively with Cisco, HPE, Dell EMC and Juniper.