Buyout firms beat telecoms groups to $8.2bn Avaya

TPG and Silver Lake Partners reportedly fended off competition from telecommunications groups Nortel Networks and Cisco Systems to buy Lucent Technologies spin-out Avaya.

US buyout firms TPG and Silver Lake Partners have bought part-listed US telecommunications company Avaya for $8.2 billion (€6 billion), according to media reports.

The buyout firms saw off competition from telecoms groups Nortel Networks and Cisco Systems, which had also expressed interest in Avaya, to secure their $17.50 a share bid.  Avaya shares closed at $16.72 on the New York Stock Exchange last night.

The telecoms company originally span out of Lucent Technologies in 2000. After a series of investment rounds, buyout firm Warburg Pincus became the company’s biggest shareholder, holding a stake of around 23 percent in the telecoms company as of 31 June last year.

Avaya acquired German telecoms equipment maker Tenovis from KKR in 2004.

The telecoms sector has seen a spate of recent, record buyout activity. In May, Goldman Sachs and TPG agreed to buy US wireless provider Alltel for $27.5 billion – the largest-ever private equity deal in the sector. Analysts predict the deal will soon be topped by a buyout of Canadian telecom firm BCE.