Extreme Networks To Buy Avaya's Networking Business For $100M

Extreme Networks is set to acquire Avaya's Networking business for $100 million just months after Avaya said it was seeking Chapter 11 bankruptcy protection.

Extreme Networks CEO Ed Meyercord said he expects Avaya's networking business to generate over $200 million in annual revenue for his company.

"The addition of Avaya's networking business is consistent with our growth strategy and will broaden Extreme's enterprise solutions capabilities by complementing our product portfolio across our vertical markets," said Meyercord, in a statement. "We expect the Avaya business to generate over $200 million in annual revenue, increase our market share and offer new opportunities for our customers."

[Related: CRN Exclusive: Extreme Networks To Launch New SMB Switches]

In January, Avaya filed for Chapter 11 bankruptcy protection, saying it needed to restructure its balance sheet to better position itself for the future.

To facilitate the restructuring, Avaya filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York.

"We believe that a sale of our Networking business is the best path forward for all stakeholders," said Avaya CEO Kevin Kennedy, in a statement. "It provides a clear and positive path for our Networking customers and partners and enables the Company to focus on its core, industry-leading Unified Communications and Contact Center solutions. Today's announcement furthers our overall restructuring goals as we position the rest of Avaya for long-term success."

Kennedy said, "The possibility of Avaya Networking being part of a pure-play networking company like Extreme Networks would allow greater opportunities for its products and services to thrive and the industry to continue to benefit from our award-winning wired, WLAN and Fabric technology."

Extreme has entered into an asset purchase agreement with Avaya in which Extreme will serve as the primary bidder in a section 363 sales under the Bankruptcy Code. Other interested parties will be provided the opportunity to submit bids before a deadline set by the Bankruptcy Court.

If other qualified bids are submitted, an auction process will be conducted, in which the $100 million agreement with Extreme would set the floor value for the auction, according to a release.

Approval of a final sale to either Extreme or a competing bidder is expected to take place shortly after completion of an auction.

The transaction is expected to close by June 30, 2017, the end of Avaya’s fiscal third quarter 2017, subject to regulatory approvals and other customary closing conditions.

Extreme's Meyercord said he expect the combined businesses can achieve synergies and provide accretion to Extreme's fiscal 2018 earnings and cash flow.