Avaya has has ended two weeks of buy-out speculation and agreed to a merger with Silver Lake, an investment firm focused in technology-driven growth industries, and TPG Capital, a private investment partnership, for about $8,2-billion.
Under the terms of the agreement, Avaya shareholders will receive $17,50 in cash for each share of Avaya common stock they hold, representing a premium of approximately 28% over Avaya's closing share price of $13,67 on 25 May 2007, the last trading day prior to published reports regarding a potential transaction, and a premium of approximately 33% over Avaya's average closing share price of $13.17 during the 30 trading days ending 25 May 2007.
"After an extensive review of Avaya's strategic alternatives with Avaya management and our financial advisors, the board of directors of Avaya determined that this transaction with Silver Lake and TPG provides the best value for Avaya's shareholders," says Phil Odeen, non-executive chairman of Avaya's board of directors.
Avaya's board of directors has approved the merger agreement and resolved to recommend that Avaya shareholders adopt the agreement.
"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 Louis D'Ambrosio, president and CEO, Avaya.
"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."
David Roux, a co-founder and MD of Silver Lake, adds: "Our interests are aligned with the long-term interests of Avaya's customers and employees. We have full confidence in Avaya's excellent management to build on the company's remarkable technology and history, which spans more than a century, to deploy advanced IP communications solutions as a source of competitive advantage for customers."
The transaction is expected in the third quarter of 2007, subject to receipt of shareholder approval and customary regulatory approvals, as well as satisfaction of other customary closing conditions. There is no financing condition to the obligations of the private equity group to consummate the transaction, and equity and debt commitments for the merger consideration have been received.
The merger agreement provides for Avaya to solicit proposals from third parties during the next 50 days. In addition, the company may, at any time, subject to the terms of the agreement, respond to unsolicited proposals. There can be no assurance that this process will result in an alternative transaction. Avaya does not intend to disclose developments with respect to the solicitation process unless and until its board of directors has made a decision.