Avaya on Monday said it agreed to be acquired by private equity firms TPG Capital and Silver Lake for $8.2 billion, the latest in a string of mergers in the telecommunications-equipment industry.
Under the terms of the agreement, Avaya shareholders will receive $17.50 in cash for each company share, a premium of about 28% to its closing share price on May 25, 2007, when reports about a possible deal began to circulate.
Avaya's small size compared with rivals like Cisco Systems has long made the company a subject of takeover speculation. Such talk intensified last week after Avaya postponed an investor conference.
The takeover follows a series of deals telecommunications-equipment industry, including the formation of Alcatel-Lucent and a venture between the network units of Nokia and Siemens.
Avaya, which generates about $5 billion in annual revenue, leads the market for office equipment for Web-based telephone calls despite its small size relative to rivals Nortel and Cisco, analysts said.
"After an extensive review of Avaya's strategic alternatives with Avaya management and our financial advisors, the board of directors of Avaya determined that this transaction with Silver Lake and TPG provides the best value for Avaya's shareholders," Ayaya Non-Executive Chairman Phil Odeen said in a statement.
The transaction is expected to be completed in the fall of 2007, subject to approval by shareholders and regulators. Terms also allow Ayaya to solicit proposals from third parties during the next 50 days.
Credit Suisse served as financial advisor to Avaya and its board, while Citi and Morgan Stanley acted as financial advisors to Silver Lake and TPG.