Avaya snaps up Nortel Enterprise Solutions division

Nortel began selling off pieces of its business in January

Beleaguered telecoms equipment provider Nortel has agreed to sell off its Enterprise Solutions business to communications firm Avaya.

Following an auction, Avaya will pay $900m (£544m) in cash to Nortel, and set aside an additional pool of $15m (£9m) for an employee retention programme.

In return, the firm will receive all of the assets of Nortel's global Enterprise Solutions business, as well as the shares of Nortel Government Solutions and DiamondWare.

"Our successful bid brings us closer to adding Nortel and its complementary channel, portfolio, research and development, and global presence to Avaya," said Kevin Kennedy, president and chief executive of Avaya.

"We believe the acquisition brings inherent value to both organisations' customers, employees and partners, and we look forward to its successful conclusion."

Toronto-based Nortel filed for bankruptcy protection in January, and began selling off pieces of the business to various competitors. The firm recently inked a $1.13bn (£686m) deal to sell its wireless business to Ericsson after a bidding war with Nokia Siemens.

Nortel announced last month that its president and chief executive Mike Zafirovski was stepping down with immediate effect, and that the board of directors was being reduced from nine members to three.

The break-up of the company has also cost it the contract for the upcoming 2012 Olympic Games in London, which Cisco has since picked up.

"This is fantastic news for our customers as this will empower us to continue to deliver industry-leading solutions and services focused on unlocking the enterprise business potential enabled by unified communications," said Joel Hackney, president of Nortel Enterprise Solutions.

"As we work through integration planning, it is business as usual and we will continue to focus on supporting our installed base."

The Avaya deal will still need to go through the necessary regulatory procedures, but no problems are expected as US and Canadian courts have already approved Nortel's request to sell off the enterprise business.