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Exclusive: With IPO elusive, Avaya explored sale to Oracle this year - sources

October 7, 2013 | Telepresence Options

avaya sign

Story and images by Nicola Leske, Soyoung Kim and Greg Roumeliotis / Reuters

SAN FRANCISCO/NEW YORK�(Reuters) - Avaya Inc's private equity owners explored selling the telecommunications equipment company earlier this year, instead of taking it public, and had talks with Oracle Corp, three people familiar with the matter said this week.

Silver Lake and TPG Capital LP, which took Santa Clara, California-based Avaya private for $8.4 billion in 2007, held discussions with hardware and software giant Oracle in the first half of 2013 about a deal, but the talks fizzled in the last few months, the people said.

Avaya filed for an initial public offering in 2011 but never pulled the trigger, despite very favorable market conditions this year, due to concerns over convincing potential investors about the company's growth prospects.

The efforts to sell the company highlight the challenges facing the private equity firms in cashing out of their investment in Avaya, whose conferencing systems and network gear are in a fierce competitive race with companies such as Cisco Systems Inc and ShoreTel Inc.

Two of the sources said that while Avaya hoped it could revitalize growth to be in a position for an IPO in 2014, the buyout firms faced an uphill struggle to make the company appealing to stock market investors.

The sources asked not to be identified because of the confidential nature of the discussions. Avaya and Oracle did not respond to requests for comment while Silver Lake and TPG declined to comment.

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