Report says Avaya in talks for private-equity buyout

Possible deal in the works with Silver Lake Partners to take VoIP vendor private

A private-equity firm is reportedly seeking a buyout of Avaya, according to The Wall Street Journal.

The report says Avaya is in talks with private-equity firm Silver Lake Partners about an acquisition plan for the enterprise VoIP provider. Avaya on Sunday postponed its May 31 analyst conference, which observers say points to a potential buyout scenario.

Avaya was recently talking to rival Nortel about a buyout deal earlier in the month, the Journal says. That deal reportedly fell through as the two sides could not agree on whether to base the deal on Nortel cash or stock.

Avaya generated US$5.2 billion in revenue in fiscal 2006, which ended Sept. 30, and netted $220 million in profit.

Avaya's stock, which fell as far as $2 per share five years ago, was up to $15.65 at 9 a.m. Tuesday, May 29 - up 15% from its close Friday.

While private-equity buyouts are becoming a trend, network vendors are not often mentioned as targets. In 2005, Enterasys, the former Cabletron enterprise switching arm, was taken private in a $386 million buyout by The Gores Group and Tennenbaum Capital Partners. 3Com has also surfaced as a potential network-gear maker that could go private.

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Phil Hochmuth

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