Avaya Company Sale Discussions: Decision By September 2019
Avaya is evaluating takeover offers and will make a decision on a potential company sale within 30 days, the technology company disclosed today.
Update, October 3, 2019: RingCentral Invests In Avaya
Update, September 12, 2019: Avaya statement on potential company sale.
Original August 13, 2019 Report: Continues Below
Avaya hired J.P. Morgan to explore “strategic alternatives intended to maximize shareholder value,” according to CEO and President Jim Chirico, back around May 2019. Fast forward to present day, and Chirico offered this prepared statement:
“As an update on the strategic alternatives process we are conducting with J.P. Morgan, at this time we are in advanced discussions with multiple parties on a range of strategic transactions to maximize shareholder value. We expect to bring this process to a conclusion within the next 30 days.”
Avaya’s stock rose about 12 percent in pre-market trading. Still, the stock is trading at only about $11.55 — down from a 52-week high of $23.40.
Chirico’s statement surfaced in Avaya’s Q3 2019 fiscal results. For the quarter, GAAP revenue was $717 million, up $25 million $692 million in Q3 2018. The company’s GAAP net loss was $633 million due mainly to an impairment charge, compared to a GAAP net loss of $88 million in the corresponding quarter last year. The revenue figures were about $4 million higher than Wall Street was expecting, according to SeekingAlpha.
Avaya: Potential Private Equity Buyers
Rumors about Avaya being up for sale have swirled throughout 2019. Potential Avaya bidders may include private equity firms Apollo Global Management LLC, Permira Holdings and Searchlight Capital Partners, according to an April 2019 Bloomberg report. And in March, the company was considering a potential $5 billion company sale, Reuters said at the time.
Still, that figure seems out of reach considering Avaya’s current market capitalization is $1.24 billion, according to SeekingAlpha.
Strategic buyers — i.e., technology companies — may also be involved in the bidding process, though ChannelE2E has not seen a list of prospective bidders.
Avaya Business Evolution, Customer Conference
Avaya has evolved from a hardware provider into a cloud-centric communications provider over the past decade. But the journey hasn’t been easy. After stumbling under previous owners, the company emerged from Chapter 11 bankruptcy protection in December 2017 with hits partner strategy intact.
Avaya typically holds its major partner and customer conference in Q1 of each year. The Avaya Engage 2020 conference is scheduled for February in Phoenix.