Nortel-Avaya Deal Never Made Sense? Not Sure About That

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Includes: AV, NT
by: Mark Evans
Network World takes a stab at explaining why the $8.2-billion purchase of Avaya (NYSE:AV) by two private equity investors is good for consumers. The author, Nick Lippis, offers this take on why Nortel’s (NT) apparent interest in Avaya didn’t make sense.

I never did think that Nortel would or could step up to buy Avaya, because it simply did not make sense. The financials could not work for Nortel, which carries a market cap of only $11.5 billion. Most importantly, the product overlap is huge, and integrating the two companies is well beyond the resources available to the Nortel executive staff at the moment.

The comment about Nortel’s market cap is off the mark because it’s the structure of the deal (the amount, shares, stock, etc.) that are more important and relevant. His second point, however, is very on the mark.

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