Avaya Deal Raises Concerns

|
Includes: AV, NRTLQ
by: Mark Evans

It looks like Avaya’s (NYSE:AV) proposed $475-million acquisition of Nortel’s (OTC:NRTLQ) enterprise business could face some stumbling blocks as a growing number of industry players express concern it would reduce competition.

The Wall St. Journal reports that the U.S. Department of Justice has received a letter and a complaint recent requesting it to block the proposed deal.

“My company believes that this transaction will detrimentally affect and lessen competition, deny choice to consumers and ultimately raise prices,” said Jim Goebel, president with Sotel Systems, in a letter to the DOJ.

Goebel told the WSJ that the DOJ held an hour-long call between himself and six DOJ officials earlier this week.

The DOJ also received a verbal complaint from Ross Debernardis, president and CEO with ACCESS Communications, who is concerned about the stalking horse agreement’s “lack of teeth.”

He said Avaya won the auction for the enterprise business, it could delay closing the deal, and, in the meantime, continue to recruit Nortel customers and re-sellers.