Private equity, Content

Avaya Buyout Bid Rumor: Private Equity Acquiring UCaaS Company?

Avaya is considering a leveraged buyout offer from a private equity firm that values the unified communications company at more than $5 billion, including debt, according to Reuters.

Related Update, September 12, 2019: Avaya statement on potential company sale.

The buyout leak may be designed to bring additional bidders to the table, sources tell ChannelE2E. The current offer is roughly $20 per share -- far higher than the $13.21 closing price from Friday, March 22, Reuters says. The buyout offer also is designed to cover Avaya's $3.2 billion in debt, according to the report. The bidder's name was not revealed in the article.

Avaya Business Transformation: UCaaS & CCaaS Challenges

Avaya emerged from Chapter 11 bankruptcy in Q1 of fiscal 2018. The company has aggressively pushed from classic hardware and software sales toward cloud-driven recurring revenues and subscription services.

Much of the focus involves unified communications as a service (UCaaS) and Contact Center as a Service. A new Device as a Service (DaaS) offering has also surfaced. A partner push continues, with the Avaya Engage 2020 conference set for February of that year.

The business transformation hasn't been easy. Avaya's Q1 fiscal 2019 revenue was $738 million, down about $14 million from Q1 fiscal 2018, according to results disclosed in February 2019. GAAP net income was $9 million, up from $3.2 million in Q1 fiscal 2018. The revenue figures were about $12 million to $37 million below Wall Street's expectations, Seeking Alpha estimates.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.