In an outcome that was unsurprising for most, Extreme Networks emerged as the winning bidder for the Avaya enterprise networking business. It will be moving ahead with the $100 million acquisition of the unit following the firm’s filing for Chapter 11 bankruptcy in January (2017).
Avaya originally purchased its networking business from the former giant in the sector, Nortel, in 2009. The acquisition came in similar circumstances to the ones that Avaya are facing now. However, the distinction is that Avaya made the purchase when Nortel fell into bankruptcy and was forced to shed a great deal of its business throughout a serious of auctions.
The Avaya Restructuring Opportunity
Avaya declared bankruptcy in an attempt to give itself more time to restructure and support its balance sheet. According to Kevin Kennedy, the CEO of the brand, Avaya believes that selling their networking business is the best way to move forward. They feel that this step gives them a positive path for all networking partners, and enables them to focus on their UC and contact centre solutions.
According to Extreme Networks president & CEO, Ed Meyercord, the recent acquisition will help the growing company to establish itself as a major competitor in the world of enterprise networking. Extreme believes that the Avaya business has the potential to generate astonishing revenues of around $200 million every year. This will add to several recent acquisitions that have helped the firm to continue its expansion.
Not the First Acquisition for Extreme
In 2016, Extreme Networks purchased the Zebra wireless local area network business for $55 million. Recently in this year, it also purchased the Brocade data centre networking assets after the company’s new owner, Broadcom revealed that they were only interested in the storage elements of the business.
While the assets obtained from Zebra are expected to deliver about $115 in revenues to Extreme Networks, Brocade’s are projected to deliver over $200 million during Extreme’s financial year in 2018, which will begin on the first of July this year.
According to Meyercord, the purchase of Avaya’s networking business will complement the company’s existing portfolio and help to broaden their range of enterprise solutions and capabilities across their target markets. The brand is currently moving forward with integration planning for both the Brocade data centre business and Avaya networking business.
