Network equipment manufacturer Avaya has agreed to a $8.2 billion (£4.1bn) cash buyout by private equity firms TPG Capital and Silver Lake Partners, the companies announced.
The New Jersey-based company's board of directors have accepted a $17.50 per share offer, which must still be approved by Avaya shareholders. The offer places a premium of around 28% on the firm's value over Avaya's 25 May closing price of $13.67, the last day before rumours begun to circulate that the company would likely be acquired. The deal is expected to close in the fall of this year, the companies said.
The agreement also allows Avaya to actively encourage bids for the company from other third parties over
the next 50 days.
Avaya's relatively high cash flow and low debt made it a target to go private. Along with TPG and Silver Lake, Nortel Networks was also pursuing the former AT&T telecom equipment maker.
This latest acquisition also continues a recent trend of networking and telecommunications firms being bought by private equity firms. In late May, TPG and Goldman Sachs Group's private equity arm bought mobile service provider Alltel for $27.5bn. Bell Canada remains a takeover target of a potential bid by Cerberus Capital Management.
Analysts have said the sale may cause unease among Avaya’s customer base. While observers say such sweeping changes in the enterprise voice industry could drive a wave of consolidation.