Avaya is set to sell its networking business to Extreme Networks for US$100 million (A$131.7 million) as it restructures to stave off bankruptcy.
The vendor – which filed for chapter 11 bankruptcy protection in January to reorganise its business – got into the networking market after buying a slice of Nortel in 2009 under similar circumstances.
Avaya said other “interested parties” could still bid for its networking business, and if they did Extreme’s offer would “set the floor value” in an auction process.
Any purchase of the assets is expected to close by June 30 this year.
“As the stalking horse bidder, Extreme will be entitled to a break-up fee and expense reimbursement, if it ultimately does not prevail as the successful bidder at the required auction for Avaya's assets,” Extreme Networks said in a statement.
Extreme CEO Ed Meyercord said he expected Avaya’s networking business “to generate over US$200 million in annual revenue”.
He said it would increase the company’s market share and “offer new opportunities for customers”.
Avaya’s A/NZ managing director Peter Chidiac sought to reassure customers and partners in a separate statement.
“While we understand this announcement may cause uncertainty in the market, we want to assure our Australian and New Zealand customers and partners there will be no change to the way we interact with and support them during the sale and ultimate transition process,” he said.