Avaya Inc. announced its agreement with Extreme Networks to sell its networking business for approximately $100 million.
The strategy of Extreme Networks is to expand its enterprise solutions. Extreme Networks expects that Avaya’s networking business will generate over $200 million in annual revenue, increase its market share.
Extreme Networks in February 2017 said that it completed the acquisition of Zebra’s Wireless LAN Business — solidifying Extreme’s position as the third largest provider in its target enterprise campus market.
Extreme Networks expects that the combined businesses can achieve synergies and provide accretion to Extreme’s fiscal 2018 earnings and cash flow.
“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 Ed Meyercord, president and CEO of Extreme Networks.
Extreme Networks posted $148.1 million revenue (+6 percent) in its fiscal second quarter ended December 31, 2016. The company is targeting revenue of $151-$161 million for its third quarter of fiscal 2017 ending March 31, 2017. The company is targeting gross margin of 53.4-54.5 percent.
Avaya background
In January, Avaya announced it filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code.
This agreement will constitute a primary bid for the networking business in a sale process being conducted under Section 363 of the U.S. Bankruptcy Code. The auction process and transaction closing are expected to conclude within 3 to 4 months.
“The sale of networking business enables the company to focus on its core 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,” said Kevin Kennedy, president and CEO of Avaya.
Baburajan K
editor@infotechlead.com
