Avaya Considers Buyout

BASKING RIDGE, N.J. (AP) – Telecommunications gear maker Avaya is negotiating with private equity and strategic bidders about selling all or part of the company, according to a media report.

The Wall Street Journal, citing people familiar with the matter, said would-be buyers include private equity firms attracted to the $6 billion company's cash flow and low debt. There's also interest from network makers Cisco Systems and Nortel Networks.

When contacted by The Associated Press on Monday, Avaya representatives declined to comment on the report, saying it's company policy not to comment on “speculation and rumors.”

The Basking Ridge-based company went through tough times in 2002, but now appears to be trying to take advantage of a period of high-tech dealmaking.

Avaya has already postponed an analyst day meeting scheduled for May 31, and a new date for that session hasn't been released, a signal to some analysts that it may be in buyout talks.

According to The Wall Street Journal, Avaya is discussing a leveraged buyout plan with the private equity firm Silver Lake Partners.

Avaya also reportedly discussed a deal with Nortel earlier this month. Momentum slowed on the talks when the two companies couldn't agree on a price or whether Nortel should pay with cash or stock, but a deal might still happen, people familiar with the situation told The Wall Street Journal.

Cisco, a giant in networking and telecom gear, has avoided buying much-smaller Avaya for years, but may now be interested in Avaya's private phone switch unit that uses Internet protocol technology. The two companies have been competing in providing telephone switching technologies to businesses using servers for such operations.

One person familiar with the matter told The Wall Street Journal that Cisco might be interested in buying all of Avaya.

Avaya equipment helps direct voice and data traffic at almost all of the largest corporations in the U.S.

A former division of Lucent Technologies and its predecessor firm AT&T, Avaya also has patents and equipment for transforming traditional phone and data systems into integrated Internet Protocol-based networks.