by financegrunt » Thu Aug 22, 2019 6:55 am
Avaya stock spikes on report it has a buyout offer from private-equity firm
Tuesday, August 20, 2019
Barron’s
Eric J. Savitz
Avaya Holdings stock was trading sharply higher Tuesday on a report that the enterprise communications software company is considering a buyout offer from the private-equity firm Clayton, Dubilier & Rice. That follows ongoing speculation that the company was close to accepting an acquisition bid by Mitel Networks, a Canadian company that itself went private in a $2 billion acquisition in 2018 by Searchlight Capita Partners.
A spokesman for Avaya said the company as a matter of policy doesn’t comment on rumor and speculation. Clayton, Dubilier & Rice didn’t immediately respond to a request for comment.
Avaya has had a complex and checkered history over the last two decades. The company traces its roots back to pre-breakup AT&T. AT&T spun off Lucent, once AT&T’s in-house telecom equipment business, in 1996. Lucent then spun Avaya as a separate company in 2000. In 2007, Silver Lake and TPG Capital took Avaya private in a $8.2 billion deal that became an albatross for the buyers. Avaya struggled with a debt-ridden balance sheet, and filed for protection from creditors under chapter 11 of the federal bankruptcy code early in 2017. It emerged with a restructured balance sheet at the end of that year, and then listed on the New York Stock Exchange. The stock hasn’t exactly thrived in the return to the public market, sliding about 38% over the last two years before a recent rebound on takeover speculation.
In May, Avaya disclosed that it had hired JPMorgan to consider strategic alternatives to maximize shareholder value after “the receipt of expressions of interest” from potential buyers. Weeks before that, the Wall Street Journal had reported that Mitel had offered $20 to $22 a share in stock. In March, Reuters had reported that an unspecified private-equity firm was considering a bid for Avaya.
In reporting earnings earlier this month, Avaya said it was “in advanced discussions with multiple parties on a range of strategic transactions to maximize shareholder value,” and that it expected to bring the process to a conclusion within 30 days.