Silver Lake Partners and TPG Inc. have agreed to buy Avaya for about $8 billion, the New York Times has reported, in the largest leveraged buyout of a computer networking company.
Avaya shareholders will receive about $17 a share, the New York Times said, citing unidentified people familiar with the transaction. That’s 5.7 percent more than Avaya’s closing price on June 1, and 24 percent more than the price before speculation about the purchase surfaced.
The deal would give the buyout firms the world’s biggest maker of corporate phone equipment, going head to head with Cisco Systems Inc. in the $5 billion market for IP based telephony systems.
Shares of Avaya jumped 49 cents, or 3.1 percent, to $16.57 at 9:47 a.m. in New York Stock Exchange composite trading. They climbed 15 percent on May 29 after the Wall Street Journal reported that Avaya was in talks with Silver Lake.
Takeover speculation began building last month when Merrill Lynch & Co. analyst Tal Liani said in a report that Avaya would be a “perfect’ buyout candidate because of its improving cash flow and profit margins. As reported by Comms Business Magazine, the company then cancelled an analysts’ day scheduled for May 31.