Boston, MA 10/07/2013 (wallstreetpr) – Earlier this year, Oracle Corporation (NYSE:ORCL) was approached by Silver Lake and TGP Capital LP as they considered to sell off the telecommunications equipments company. The company prefers to keep all the discussions pertaining to the deal a private affair. In a similar deal in 2007, the former had bought the Santa Clara, California based Avaya Inc. in $8.4 billion. However, when approached, none of the concerned parties were ready to give anything away yet. While Oracle and Avaya kept themselves unavailable to make any comments, Silver Lake and TGP refused to say anything at all.
The deal has been quite a buzz in the market for past few months. In 2011, Avaya had filed a public offering but nothing ever happened since then. Although this year the market conditions were quite in favor of the buy, yet no actions were taken. This perhaps could be accounted for by the possibility that it was difficult to rope in investors for the deal seeing the unpromising growth scenario of the company. It had been quite a challenge for private equity companies to draw profit out of their investments in Avaya. Avaya on the other hand had also been in the market against giants in the field like Cisco and ShoreTel Inc. This is the key reason for the talk of selling the company.
To shoot up its growth prospects, Avaya had considered taking overs even before. In 2009, it had taken over the enterprise business solution of Nortel Network Corporation for $933 million, which was declared bankrupt. Despite these attempts, the only saving grace for the company had been changes in its operational procedures and cost cutting. By the end of March 2013, Avaya recorded a debt of $6.1 billion in debt. The company holds $303 million cash. The CEO, Kevin Kennedy commented that the 56% gross margin gain percentage for the third quarter earnings which were declared in August was perhaps the maximum in the history of the company.
Avaya’s sales are estimated to be mainly due to the products and services it provides to the network for communications to companies. Out of the 300,000 customers it has, more than 95% among them are Fortune 500 companies. With this deal, Avaya could hope to renew its growth and hope to be an IPO by the coming year.
