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Extreme Signs Agreement to Purchase Bankrupt Avaya's Networking Business PDF Print E-mail
Tuesday, 14 March 2017 11:12

Extreme Networks, Inc. ("Extreme") has entered into an asset purchase agreement with Avaya Inc. to acquire its networking business. Under the terms of the agreement, the assets of Avaya's networking business unit will be sold to Extreme for approximately $100 million, in accordance with the terms and conditions of the asset purchase agreement.

"The addition of Avaya's networking business is consistent with our growth strategy and will broaden Extreme's enterprise solutions capabilities by complementing our product portfolio across our vertical markets," stated Ed Meyercord, President and CEO of Extreme Networks. "Furthermore, 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."

Avaya announced it filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code on January 19, 2017. This agreement will constitute a primary bid for the networking business in a sale process being conducted under Section 363 of the U.S. Bankruptcy Code. As the stalking horse bidder, Extreme will be entitled to a break-up fee and expense reimbursement, if it ultimately does not prevail as the successful bidder at the required auction for Avaya's assets. The auction process and final agreement will be subject to the approval of the United States Bankruptcy Court for the Southern District of New York. In addition, completion of the transaction remains subject to customary closing conditions and regulatory approvals. The auction process and transaction closing are expected to conclude within 3 to 4 months.

Get Out of the 49ers Stadium Suite

Bankrupt Avaya told the court last week it wants out of the$350,000 annual payment for its San Francisco 49ers stadium suite and that the team's recent miserable performance has made the suite harder to sell off.

According to a Reuters report, the cost of the license for the suite, $350,000 due this month, is a burden on Avaya's estate and the company is seeking court permission to reject the agreement which was signed for 10 years.

Avaya is none too happy about the team's recent performance either saying in court, "Indeed, the San Francisco Forty Niners ended their 2016 football season with a 2-14 record, following a 5-11 campaign in the 2015 and an 8-8 record in 2014," the company said. "The San Francisco Forty Niners have also replaced their head football coach for the 3rd time during this time span. The debtors have, therefore, determined to reject the suite contract to relieve their estates of the ongoing costs arising under the suite contract."

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