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Avaya agrees to USD8.2bn acquisition by Silver Lake and TPG Capital

US telecoms provider Avaya has agreed to be acquired by Silver Lake Partners, which makes large-scale investments in technology-driven growth industries, and TPG Capital, a leading private

US telecoms provider Avaya has agreed to be acquired by Silver Lake Partners, which makes large-scale investments in technology-driven growth industries, and TPG Capital, a leading private investment partnership, for approximately USD8.2bn.

Based in Basking Ridge, New Jersey, Avaya provides more than one million businesses worldwide with solutions for IP telephony, unified communications, contact centres and communications-enabled business processes.

Under the agreement, shareholders will receive USD17.50 in cash for each share of Avaya common stock, representing a premium of approximately 28 percent over the closing share price of USD13.67 on May 25, the last trading day before the publication of media regarding a potential sale, and of some 33 percent over Avaya’s average share price of USD13.17 during the 30 trading days to May 25.
 
‘After an extensive review of strategic alternatives with management and our financial advisors, the board of directors determined that this transaction with Silver Lake and TPG provides the best value for Avaya’s shareholders,’ says non-executive chairman Phil Odeen.

The board has approved the agreement and resolved to recommend that Avaya shareholders endorse it. Should they do so, the parties expect to complete the transaction in the autumn. The agreement allows Avaya to solicit higher offers from third parties during the next 50 days or at any time to respond to unsolicited proposals.
 
‘In addition to delivering compelling value for our shareholders, the partnership with Silver Lake and TPG also creates clear value for Avaya employees and customers,’ says president and chief executive Louis J. D’Ambrosio. ‘The investment in our people and technology and the operating structure will enable us to extend our technology and services leadership and continue to deliver the ‘gold standard’ of communication solutions in the industry.’

Says Silver Lake co-founder and managing director David Roux: ‘Our interests are aligned with the long-term interests of Avaya’s customers and employees. We have full confidence in Avaya’s management to build on the company’s technology and history, which spans more than a century, to deploy advanced IP communications solutions as a source of competitive advantage for customers.’

TPG partner John Marren adds: ‘As one of the earliest private investors in technology and telecommunications, TPG has come to know Avaya for its roster of leading customers, history of product innovation and commitment to customer service.’

Credit Suisse is exclusive financial advisor to Avaya and its board of directors, while Weil, Gotshal & Manges acted as legal advisor to Avaya and Skadden, Arps, Slate, Meagher & Flom provided legal advice to Avaya’s board. Citi and Morgan Stanley acted as financial advisors to Silver Lake and TPG and have committed, together with JPMorgan, to provide debt financing for the transaction. Ropes & Gray is legal advisor to Silver Lake and TPG.

Silver Lake’s portfolio has included technology industry leaders such as Ameritrade, Avago, Business Objects, Flextronics, Gartner, Instinet, IPC Systems, MCI, Nasdaq, Network General, NXP, Sabre Holdings, Seagate Technology, Serena Software, SunGard Data Systems, Thomson and UGS.

TPG Capital is the global buyout group of TPG, a leading private equity firm formerly known as Texas Pacific Group. Founded in 1992, the firm has more than USD30bn in assets under management and offices in San Francisco, London, Hong Kong, New York, Minneapolis, Fort Worth, Melbourne, Menlo Park, Moscow, Mumbai, Shanghai, Singapore and Tokyo. Its telecommunications and technology investments include Eutelsat, Freescale Semiconductor, Intergraph, Japan Telecom, Lenovo, MEMC Electronic Materials, ON Semiconductor, Sabre Holdings, SunGard Data Systems, Seagate Technology and the pending acquisition of Alltel.

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