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Avaya-Nortel sale gets Industry Canada approval

Avaya's acquisition of the enterprise assets of Nortel Networks has gotten its final approval, with sign-off from Industry Canada

Industry Canada has approved the takeover by Avaya Inc. of the enterprise assets of Nortel Networks Corp., which is operating under bankruptcy protection.

Basking Ridge, N.J.-based Avaya announced Friday the federal government completed a review required under the Investment Canada Act. Avaya won an auction in September when it agreed to pay US$915 million for the Nortel units that make switches, routers, firewalls, virtual private networking (VPNs), unified communications, private branch exchanges (PBXs), phones and key systems.

Nortel, which has lost money nearly every year except 1998, filed for protection from creditors last January. It has sold one wireless unit – which makes code division multiple access base stations for cellular carriers – to Telefonaktiebolaget LM Ericsson of Sweden for US$1.13 billion. That deal resulted in Ericsson hiring more than 900 former Nortel workers in Canada.

Earlier this month, Ciena Corp. won an auction to buy Nortel’s optical networking and carrier Ethernet units for US$769 million. That deal is still subject to regulatory approval.

On Friday, Avaya said it expects the deal to buy the enterprise assets will close within a month. The US$915 million Avaya is paying is comprised of US$900 million in cash to Avaya and US$15 million in “employee retention.”

Avaya, which is privately held by Silver Lake Partners, was born as a separate firm in 2000, when Lucent Technologies Inc. decided to spin off its enterprise unit. Lucent was formerly known at AT&T Bell Labs and merged with Alcatel SA of France in 2006.

Last year, Avaya hired Charlie Giancarlo, a former executive with Cisco Systems Inc., as its chief executive officer. He was replaced by Kevin Kennedy.