Avaya Selected to Acquire Nortel Enterprise Solutions 
 
On July 20, 2009, Avaya announced its intention to purchase Nortel’s Enterprise Solutions business. On September 14 2009, Avaya won the auction to pursue the acquisition of Nortel’s Enterprise Solutions business, subject to bankruptcy court approval. Further regulatory review and approvals are required prior to closing the deal but this marks an important step in significantly strengthening Avaya’s leadership in business communications and positioning the company to effectively deliver industry leading solutions and services to customers around the globe. 

Until the deal closes, each company will continue to operate independently, and it is business as usual. 

This acquisition enables Avaya to offer expanded global reach, a strong channel partner ecosystem and a strong portfolio of products and technologies in Enterprise Communications. The combined company will focus on bringing innovation to customers that deliver high impact, intuitive experiences that is simple, personalized and transforms the way the business user communicates and runs his/her business. The company will provide comprehensive manufacturer support in partnership with the channel to enable customers to leverage and maximize their existing investments. Avaya has received an endorsement from the International Nortel Users Association (INNUA) and various customers and partners worldwide. 

Nortel and Avaya share a commitment to open standards rather than proprietary architectures and have been leaders in SIP innovation. The Avaya Aura™ SIP based architecture offers customers the opportunity to save significant costs in the deployment of business communications. It offers a simplified operational framework. It also provides seamless integration to other SIP solutions from other manufacturers and can provide the ability for customers of both companies to migrate to the benefits of SIP within a global multi-vendor environment whenever they are ready, leveraging existing investments in Nortel and Avaya solutions. 

Although the deal awaits regulatory approval, Avaya is committed to integrating the Nortel Enterprise Solutions business as quickly as possible upon closing. We know that employees, customers, partners and suppliers are eagerly awaiting the details of how we will integrate after the transaction is consummated. We are diligently working together in concert with various partners and customers in order to be mindful of the needs of all our constituents. While we cannot provide that detail at this time, it is the intention of both Avaya and Nortel to maintain the business momentum of both companies during this integration planning phase. 

Customer’s desire innovation that reduces their costs, simplifies their operation, increases their business agility and improves the interactions with their customers. Customers also want those capabilities to be delivered with security, reliability and scale-ability. Avaya and Nortel have a strong history in delivering upon these attributes and will continue to deliver the enterprise-class solutions they deserve.

As always, CTI’s experts are available to meet with you to address any questions regarding Avaya’s purchase of Nortel’s Enterprise Solutions Business. Contact your CTI representative or Info@Consotech.com.  Additionally you may send any questions you may have directly to CTI’s President - Kenneth Heitner (kheitner@consoltech.com). 



Frequently Asked Questions

TRANSACTION 

Q1. What was announced today? 

A1. On September 14, 2009, Nortel announced that Avaya was selected to acquire Nortel Enterprise Solutions for US $900 million and an additional pool of $15 million reserved for an employee retention program. The deal includes substantially all of the assets of Nortel’s global Enterprise Solutions business as well as the shares of Nortel Government Solutions, Incorporated and DiamondWare, LTD. The auction process is expected to formally conclude on September 16th with court approval. 


Q2. What happens next in the acquisition process? 

A2. The transaction remains subject to court approval, customary regulatory review and closing conditions. The parties are targeting to close in early December, though that timeline remains subject to change. 


Q3. When is the deal expected to close? 

A3. The transaction remains subject to court approval, customary regulatory review and closing conditions. The parties are targeting to close in early December, though that timeline remains subject to change. A joint integration planning team comprised of representatives from Avaya’s and Nortel’s major functional areas is diligently involved in integration planning, including assessments of the companies’ portfolios. This team will release information as soon as possible while adhering to regulatory and transactional guidelines. 


Q4. Is Avaya financially healthy enough to fund this transaction? 

A4. Yes. Avaya is financially healthy. The company has demonstrated strong business momentum during the past 18 months. Avaya expects to maintain the same operational and fiscal discipline moving forward.


DEAL RATIONALE 

Q5. Why is Avaya pursuing Nortel’s enterprise business? 

A5. Avaya submitted a bid for the Nortel Enterprise Solutions business, which we believe makes compelling sense for our usiness, employees, customers and artners. bp The addition of Nortel Enterprise Solutions will expand Avaya's global coverage, enlarge our portfolio of systems and services and increase our expertise and specialization. This is a strategic opportunity to acquire talent and complementary assets and position the combined company for growth and success. We are committed to protecting the communications investments of the customers of Avaya and Nortel and to effectively executing the integration of Nortel Enterprise Solutions and Avaya. 

Q6. How will this deal benefit both Avaya and Nortel? 

A6. Avaya believes that the acquisition of Nortel Enterprise Solutions will drive value for our business, partners, customers, and employees.

The enterprise communications industry is undergoing a dramatic transition as customers embrace the power of unified communications (UC). In this dynamic industry, Avaya believes the acquisition provides strategic opportunities in three areas: 

Expanded Global Coverage: The combined businesses will increase global presence in Asia, Middle East, India, and Canada as well as across industries in Healthcare, Education, and Government. The channel partner ecosystem will also be enhanced through stronger relationships with system integrators and service providers as well as an extensive channel network selling to small and medium enterprises.  Expanded Portfolio of Systems and Service: The portfolio will be strengthened through the combination of Nortel’s strong SME portfolio as well as Avaya’s existing Avaya Aura™ technology that helps enable multi-vendor integration, application enablement through SIP session standards, and reduced cost through reduction in transport costs, consolidation of servers, and decrease in administrative/operational overhead. Support services will also leverage the best of both worlds to provide a powerful value proposition, as recognized by JD Power and Associates.  Increased Expertise & Specialization: Avaya will recruit and maintain the best talent to create a company with the most experienced experts in the industry. With the combined, strong talent, Avaya will maintain the same operational and fiscal discipline moving forward. By combining complementary expertise, the company will be able to bring better products to market more quickly. Nortel’s International Users Group has also publicly endorsed our bid.

Q7. How will Nortel’s Government Solutions affect Avaya’s business? 

A7. The combination of Nortel Government Solutions (NGS) and Avaya Federal Solutions (AFS) will enhance Avaya’s ability to provide valuable solutions to the federal government. Avaya Federal Solutions and Nortel Government Solutions will provide an increased set of products, services, and solutions for the US Federal Government, its employees, troops, and citizens.


OPERATIONS 

Q8. Now that Avaya has been selected as the winning bidder in the auction, what will happen to Avaya and Nortel’s existing line of products and services? Which products and services will stay and which will go? 

A8. The Avaya/Nortel integration planning team is laser focused on ensuring that both Avaya and Nortel customers have their technology investments protected at closing. The two companies’ product portfolios will be integrated into a best-of-breed integrated portfolio together with a unified product evolution roadmap. There will be compelling evolutionary paths to the integrated portfolio with a clear increase in value for both customer bases.

Upon closing, Avaya expects to provide continuity for Nortel Enterprise Solutions and Avaya customers: 

Avaya will continue to ship existing products for 12-18 months post close, with commitment through the evolution path  Ongoing customer support for all customers acquired in the transaction will be provided for multi-year period post-close  Avaya will utilize the vertical and professional services expertise of both companies to drive realizable value and navigate complex architectural evolution  Avaya will honor the standard 3-5 year product life cycle support policy for all customers.  For data products, the Nortel roadmap and investment plan will be adopted.

Avaya expects to communicate the target portfolio and roadmap within 30 days of transaction close. Any comments prior to the completion of that integration process would be premature. 


Q9. What will the product roadmap be? What is Avaya keeping? How will the Nortel services business be integrated with Avaya’s? 

A9. Avaya and Nortel are both determined to maintain customer service levels; the combined businesses will work hard to sustain customer support and protect existing customer investments of customers. Avaya is undertaking a comprehensive evaluation of the combined portfolio of the two businesses and is committed to providing customers with a best in class product suite and evolutionary path forward to new capabilities and technologies. The company intends to announce product roadmaps within 30 days of transaction close. Support solutions will take the best of both companies to create a powerful value proposition for partners and customers. We will focus on providing manufacturer support for customers. Over time, we intend to standardize support offers and pricing models across the product portfolio. In addition, we will use the vertical and professional services expertise of both companies to drive value and navigate complex architectural evolution. 


Q10. What are Avaya’s plans for Nortel’s data business? 

A10. Avaya views Nortel’s data business as complementary to its core business and intends to protect customer investments in Nortel’s data products, after closing. To this end for data products, the Nortel roadmap and investment plan will be adopted. 


Q11. How will customer maintenance be affected by the acquisition? 

A11. Avaya has long delivered exceptional services to the market and has been recognized for services delivery. Customers of both organizations can expect the same high-quality services and maintenance with minimal service disruption. During integration, Avaya will work to minimize disruptions and work to ensure continuity for Nortel & Avaya customers. Avaya will honor the standard 3-5 year product life cycle support policy for all customers. 


Q12. How will R&D be affected by the acquisition? 

A12. The combination of Avaya with Nortel Enterprise Solutions will significantly increase the revenue base from which the company draws funding for research and development. In short, in real dollars, we expect that we will invest more in R&D. In addition, we gain access to the considerable technical skills and talent of the Nortel Enterprise development team, which will help Avaya develop better products more quickly.


CUSTOMERS 

Q13. How will Nortel's and Avaya’s customers benefit? 

A13. Customers will benefit from the enhanced product and support service capabilities that come from increased global coverage, portfolio of systems and services, and expertise and specialization as a result of the two companies. Customers will also benefit from the stabilization of supply chain and the commitment to provide a compelling evolutionary path for both Avaya and Nortel customer bases to the target portfolio. 

Avaya Federal Solutions and Nortel Government Solutions customers will benefit from an increased set of products, services, and solutions for the US federal government, its employee, troops, and citizens. 

Nortel and Avaya share a commitment to open standards rather than proprietary architectures. Customers of both companies will be able to protect their business communication investments through Avaya Aura™, Avaya’s open standards-based technology. The Avaya Aura™ architecture is compatible with Nortel’s open architecture, allowing customers a smooth evolution within a global multi-vendor environment, whenever they are ready. 

Additionally, Avaya has long delivered exceptional services to the market and has been recognized for services delivery. Customers of both organizations can expect the same high-quality services and maintenance with minimal service disruption. In addition, we will use the vertical and professional services expertise of both companies to drive value and navigate complex architectural evolution. 

Finally, the complementary research and development resources of the two companies will help the combined company bring better products to market more quickly. 


Q14. Will service levels change? 

A14. No. We do not expect for there to be any material disruptions or changes from the high-quality service levels you are accustomed to. We will provide you with further updates as we move forward. 


Q15. What will happen to Nortel customers that are using Nortel technology today? 

A15. Avaya has not yet made any decisions about the combined portfolio. A joint integration planning team is assessing the portfolios for complementary value and to determine effective roadmaps. Upon closing, Avaya expects to provide continuity for Nortel Enterprise Solutions and Avaya customers. 

Avaya will continue to ship existing products for 12-18 months post close, with commitment through the evolution path  Avaya will utilize the vertical and professional services expertise of both companies to drive realizable value and navigate complex architectural evolution.  Avaya will honor the standard 3-5 year product life cycle support policy for all customers. For data products, the Nortel roadmap and investment plan will be adopted.

We expect to provide a combined product roadmap within 30 days of transaction close. Nortel customers should feel confident that that they will be joining a financially healthy company with a strong supply chain to meet their everyday business needs. 

Avaya is committed to its core communications architecture, Avaya Aura™. Nortel customers should consider Avaya Aura™ technology as a means to migrate to SIP while integrating with their existing investments. Avaya Aura™ solutions provide flexible SIP routing across Alcatel-Lucent, Cisco, Mitel, NEC, Nortel, ShoreTel, Siemens and other vendors’ systems, allowing new, leading-edge capabilities and interoperability. 


Q16. How is this acquisition expected to impact any existing Avaya projects, deployments, or services engagements? 

A16. It will be business as usual with no impacts to existing projects, deployments, or service engagements. With the auction now complete, the joint integration planning team is now undertaking an intensive initiative designed to enable seamless integration and maximize the value of this important asset as a part of integration planning activities. 

Q17. What should I do if I have questions? 

A17. Reach out to your Avaya account manager or partner. Customers in the US can go to avaya.com and Contacts to reach the sales team and determine your account manager. Partners can be found on the main avaya.com page by going to go to Find a Partner. Customers in other countries should visit the local country’s Avaya site to determine the local contact information.

What does this mean for existing Avaya customers?

For existing Avaya customers, this transaction will have no impact on existing projects, deployments or service engagements. It should be noted that Avaya is in no way acquiring Nortel’s Enterprise Solutions business because of financial instability. This acquisition is to advance Avaya’s already superior products and services around the globe.

What does this mean for Nortel customers?

Nortel customers will benefit from Avaya’s increased global reach, as well as the combination of expertise, systems, services, and specialization of the two combined organizations. CTI can better help you understand the added benefits to being part of the Avaya network.

Nortel customers will not need to change their existing infrastructure. The open standards architecture of Avaya AuraTM integrates with multi-vendor SIP-based systems. Your communications investment will be protected, as both companies’ product portfolios are combined to provide a “best-of” suite.

Your organization will now benefit from new technologies and capabilities as this merger significantly increases the availability of R&D dollars.

The vertical and professional services expertise of both organizations will drive value and lead complex architectural migrations.

Avaya will honor the standard 3-5 year product life cycle support policy for all customers.

Avaya will continue to ship existing products for 12–18 months post-close with commitment through the migration path.

Nortel customers will be joining a financially healthy company with a strong supply chain.