Networking and communications vendor says it needs more time to study options
Avaya management says the company needs more time to study its strategic options for selling the company. While a decision was expected around the middle of September, the company says “advanced” discussions are ongoing.
The Lowdown: Earlier this year, Avaya confirmed it was looking at options for exiting the publicly traded stock markets in favor of an acquisition by another company or private equity. In August, Avaya announced it was wrapping up its deliberations and would make an announcement on its intentions by the middle of September.
The Details: Avaya isn’t providing many details about its plans or the state of the talks with investors or acquirers. In a statement, Avaya describes the discussions with possible suitors and advisors as “advanced.” Additionally, Avaya said it’s working “expeditiously” to conclude the process, but said it’s not working on any time table and will not make additional updates.
Observers say a private equity buyout is the most likely outcome of this process. However, an acquisition or merger is also possible. Rival Mitel has expressed interest in buying Avaya.
The Impact: Avaya exiting to private equity could provide it more latitude to transition more of its products and revenue to cloud-based services without the prying scrutiny of Wall Street investors.
Background: Since the beginning of 2019, Avaya has revamped its channel program and incorporated more cloud products into its portfolio. Through the recast Avaya Edge program, Avaya partners had more incentive to sell cloud-based products such as unified communications. In its third-quarter earnings report, Avaya said 59% of non-GAAP revenue is recurring.
The Buzz: “Avaya confirmed today that its review of a range of strategic alternatives is ongoing and it remains in advanced discussions. Avaya’s board of directors and management, supported by its legal and financial advisors, are working expeditiously to conclude the deliberate and comprehensive review,” Avaya said in a statement. “There can be no assurances regarding the timing of any action or transaction or that the strategic review process will result in any particular outcome. The company does not intend to provide additional updates unless or until it determines that further disclosure is necessary.”