Avaya Near Approval of Buyout Bid

By Andrew Ross Sorkin and Michael J. de la Merced

Avaya is near a deal to sell itself to Silver Lake Partners and TPG for more than $8 billion in the latest buyout in the telecommunications industry, according to people briefed on the sale.

The two private equity firms appear to have bested a rival bid from Nortel Networks and a deal may be announced Monday, those people said. But they cautioned that the talks were continuing and that Nortel could still make a higher bid.

The firms are expected to pay about $17 a share, the people said. Avaya’s shares rose 64 cents, or 4 percent, to close at $16.72 on Monday.

Speculation about a buyout first arose two weeks ago, when the company unexpectedly postponed a meeting with analysts without offering an explanation or setting a new date. An Avaya spokeswoman declined to comment.

Avaya, which was once part of Lucent Technologies and part of AT&T before that, is one of the top U.S. makers of phone equipment, rivaling Cisco, Nortel and Alcatel-Lucent in providing Internet- based communications to corporations. Much of its business focuses on upgrading companies to voice networks that include video and data services.

The company, which was spun off from Lucent in October 2000, suffered in 2002 as the dot-com bubble burst. But its financial health has rebounded so strongly that a Merrill Lynch analyst recently described Avaya as an ideal buyout candidate.

The move comes amid heavy deal-making in the telecommunications sector. Last month, Alltel, the wireless service provider, agreed to a $27.5 billion buyout offer from TPG and a unit of Goldman Sachs.

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