Back in October 2007, Silver Lake and TPG took Avaya private in an $8.2 billion deal. While the transaction involved a good amount of debt, it looks like the company has firepower. That is, Avaya has agreed to pay $900 million for Nortel Network's Enterprise division (the transaction will also involve $15 million in employee retention payments).

The transaction was the result of an auction, which appears to have had some juice. Keep in mind that Avaya's original bid was for $475 million.

Continue reading Avaya scoops up Nortel's telecom unit for $900M

Avaya scoops up Nortel's telecom unit for $900M originally appeared on BloggingStocks on Mon, 14 Sep 2009 13:20:00 EST. Please see our terms for use of feeds.

Avaya (AV) executives remain confident in acquisition originally appeared on BloggingStocks on Wed, 22 Aug 2007 07:30:00 EST. Please see our terms for use of feeds.

Avaya Inc. (NYSE: AV), a corporate phone salescompany, has a bid on the table for $17.50 per share, which is expected to go through by the end of the year. If this deal does go through, shareholders stand to make a meager return of 2.3% -- nothing great.

But the story becomes more interesting when investors consider the potential for a new acquirer to step up and make an offer -- an event that is not considered unlikely amongst the "smart money." As the NY Times Deal Book is reporting, many on Wall Street are expecting Nortel Corp. (NYSE: NT) to come out and make a higher bid for Avaya.

This is an interesting derivative of my activist arbitrage strategy I discussed here on BloggingBuyouts, a sister blog of BloggingStocks. Basically, buyers of Avaya are in a very interesting win-a-little vs. win-a-lot situation. If the $17.50 offer goes through and a buyer such as Nortel doesn't step up, shareholders will make a little. But if Nortel comes in and makes a bid, or if a bidding war transpires for the company, shareholders stand to make good money -- especially considering the little risk involved.

Tails I win, heads you lose.

Avaya Situation: A dream come true originally appeared on BloggingStocks on Fri, 20 Jul 2007 13:50:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Wachovia downgraded YRC Worldwide (NASDAQ: YRCW) to Market Perform from Outperform citing the challenging LTL freight environment and continued integration issues.

• UBS downgraded shares of BEA Systems (NASDAQ: BEAS) to Neutral from Buy on valuation as they believe expectations for a takeover or investor activism is already priced into shares.

• Matrix believes Isle of Capri (NASDAQ: ISLE) is expensive on a performance-adjusted basis and recommends investors sell shares into the recent rally, downgrading shares to Sell from Hold.

• JP Morgan cut Assured Guaranty (NYSE: AGO) to Underweight from Neutral on valuation.

• JMP Securities downgraded Avaya (NYSE: AV) to Market Perform from Strong Buy, as the firm doesn't expect a superior offer to the Silver Lake/TPG bid...

• MicroChip Technology (NASDAQ: MCHP) was cut to Market Perform from Outperform at Piper Jaffray.

• Morgan Stanley downgraded Wynn Resorts (NASDAQ: WYNN) to Equal Weight from Overweight.

• Baird downgraded Authorize.net Holdings (NASDAQ: ANET) to Neutral from Outperform.

• Morgan Keegan downgraded Inter-Tel Inc (NASDAQ: INTL) to Market Perform from Outperform.

• Stifel cut Dover Downs Gaming & Entertainment (NYSE: DDE) to Sell from Hold.

Analyst downgrades 6-19-07: AV, BEAS, CCE and YRCW originally appeared on BloggingStocks on Tue, 19 Jun 2007 11:21:00 EST. Please see our terms for use of feeds.

As I posted earlier, private equity has an appetite for chips, boxes, and wires. What will it buy next?

Before getting to that, it's worth pointing out that the notion of borrowing money to buy a high tech company is not that great. The reason is that high tech companies can quickly fall behind and lose market share if they don't come up with new products. And private equity does not usually like to invest in R&D. But if private equity buys a company with long-standing customer relationships, such concerns may be offset by the substantial cost reductions available.

Having said that, here's a list of potential candidates:

• Nortel Networks Corp. (NYSE: NT). This network equipment supplier lost $103 million on $2.5 billion in sales in the first quarter of 2007. It also lost out on its bid to acquire Avaya, Inc. (NYSE: AV). With a market capitalization of $11.4 billion, a 30% premium would make this $14.8 billion deal the biggest network equipment LBO.
• Alcatel-Lucent (NYSE: ALU). This network equipment supplier lost $590 million on $12.3 billion in sales in 2006. With a market capitalization of $30.9 billion, a 30% premium would make this the biggest deal of the lot at $40.1 billion. Given the integration challenges between a U.S. and French firm and the enormous legacy costs, an LBO of this firm might be quite profitable.
• Juniper Networks Inc. (NASDAQ: JNPR). This network equipment supplier lost $1 billion on $2.3 billion in sales in 2006. With a market capitalization of $13.9 billion, a 30% premium would make this an $18 billion deal. Unlike NT, however, I think JNPR will resist the LBO route because it has not been around long enough to accumulate the kind of legacy problems NT has in spades.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

Post Avaya, which high-tech company will private equity target next? originally appeared on BloggingStocks on Tue, 05 Jun 2007 13:40:00 EST. Please see our terms for use of feeds.

Private equity shifts gears to technology originally appeared on BloggingStocks on Tue, 05 Jun 2007 10:30:00 EST. Please see our terms for use of feeds.

Before the bell 6-5-07: Stock futures fall ahead of Bernanke, data originally appeared on BloggingStocks on Tue, 05 Jun 2007 08:06:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal reported that TPG Capital and Silver Lake are poised to buy telecommunications equipment company Avaya Inc (NYSE: AV) for about $17 a share; Nortel Networks Corporation (NYSE: NT) was also said to be interested.
• News Corporation's (NYSE: NWS) Rupert Murdoch said he is willing to go along with tighter editorial independence, but won't give in to a key demand from Dow Jones & Company Inc's (NYSE: DJ) controlling Bancroft family that they control an editorial oversight board that would protect this, the Wall Street Journal reported.
• Barron's Online's Trader section believes Service Corporation International's (NYSE: SCI) 90% surge since August is the result of funeral service companies' virtual immunity to a slowing economy or rising rates - the market's two biggest fears right now.

• The New York Times reported that software maker Cadence Design Systems Inc (NASDAQ: CDNS) is in talks with private-equity players that include Kohlberg Kravis Roberts and the Blackstone Group about a possible sale of the company.
• Technology Web sites have discovered that Apple Inc (NASDAQ: AAPL) embeds customers' personal data into files the company uses to distribute music from its online iTunes music store, creating fears about privacy, the UK Times reported.
• The UK Times also reported that Royal Bank of Scotland Group (OTC: RBSPY) may be looking to sell Southern Water for GBP4B, a move that could lead to many more deals in Britain's privatized water industry.

Newspaper wrap-up 6-04-07: TPG Capital, Silver Lake may buy Avaya originally appeared on BloggingStocks on Mon, 04 Jun 2007 09:15:00 EST. Please see our terms for use of feeds.

Avaya (NYSE: AV), which makes telecommunications equipment for enterprises, may be the latest company to be bought out by private equity interests. After rumors that Nortel (NYSE: NT) might be a buyer, it now appears that TPG Capital or Silver Lake Partners might be the buyers.

Avaya's stock has been trading in the $13 range. Word is that a buy-out might bring $17.

Avaya has a long legacy in the telecom industry. It has been at one time or another part of the original AT&T and Lucent, which merged with Alcatel last year.

Whether Nortel ends up owning Avaya or not, it is probably a better strategic fit than almost any other acquirer. While Avaya sells the telecom equipment that large companies use, Nortel sell the equipment that large telecom companies use. The odds that there is overlap in R&D and management costs is fairly high. There is also a duplication of public company costs.

With Avaya's stock already above $17, either a buy-out will be announced in the next few days, or there will be some very disappointed shareholders.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Avaya: another private equity catch? originally appeared on BloggingStocks on Mon, 04 Jun 2007 08:30:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal reported that CDW Corporation (NASDAQ: CDWC), a $6B market cap technology retailer, is being hotly pursued by a number of private equity firms including Madison Dearborn Partners.
• Avaya Inc (NYSE: AV), a telecommunications equipment maker, is said to be interested in selling all or part of the company, and is in talks with private equity firms and strategically interested companies, the Wall Street Journal also reported.

• Dr. Ronald Krall, the medical director for GlaxoSmithKline plc (NYSE: GSK) told the New York Times that some of the 4,450 patients enrolled in the drug trial for Avandia have dropped out due to safety concerns
• Norsk Hydro ASA (NYSE: NHY) is looking at the possibility of making an offer for Canadian aluminum producer Alcan Inc (NYSE: AL), Globe and Mail reported.
• The Sydney Morning Herald reported that mining company Rio Tinto plc (NYSE: RTP) has hired Deutsche Bank AG (NYSE: DB) to advise it on a possible bid for Alcan.

• According to a report from Chinese-language Commercial Times and noted in DigiTimes, Quanta Computer has reportedly received an order for five million iPhones from Apple Inc (NASDAQ: AAPL) and that the 2nd generation device will offer "a different outer design to fit different markets."

Newspaper wrap-up 5-29-07: CDW Corporation being pursued by private-equity originally appeared on BloggingStocks on Tue, 29 May 2007 09:43:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Wachovia downgraded shares of WebEx Communications Inc (NASDAQ: WEBX) to Market Perform from Outperform to reflect the company's pending acquisition by Cisco Systems (CSCO).
• Bank of America cut Avaya Inc (NYSE: AV) to Neutral from Buy with a $13 target after taking in account the company's acquisition of Ubiquity Software Corp Plc. The firm believes sales may miss consensus for the next few quarters, while gross operating margins could disappoint.
• CIBC downgraded Tractor Supply Co (NASDAQ: TSCO) to Sector Performer from Sector Outperformer. The firm sees some moderate upside for shares of TSCO but says it will be incrementally more difficult to achieve without a major fundamental driver in the near-term.
• WestLB AG downgraded shares of Nokia (NYSE: NOK) to Reduce from Hold.
• Mattel Inc (NYSE: MAT) was cut to Market Perform from Outperform at BMO Capital on valuation.

• First Albany downgraded Cerner Corp (NASDAQ: CERN) to Neutral from Buy.
• Keefe Bruyette downgraded A.G. Edwards, Inc (NYSE: AGE) to Market Perform from Outperform on valuation.
• Rodman & Renshaw downgraded shares of Genentech, Inc (NYSE: DNA) to Market Perform from Outperform citing a slowdown in near-term growth and valuation that reflects most of its future growth.
• BMO Capital cut both Anadarko Petroleum Corp (NYSE: APC) and Cabot Oil & Gas Corp (NYSE: COG) to Underperform from Market Perform.

Analyst downgrades 4-12-07: AV, DNA, NOK and MAT downgraded today originally appeared on BloggingStocks on Thu, 12 Apr 2007 11:21:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• JP Morgan downgraded Lockheed Martin Corp (NYSE: LMT) to Underweight from Neutral, citing Lockheed's outperformance as well as expectations for a more challenging environment for defense stocks.

• Harrah's Entertainment (NYSE: HET) was downgraded to Neutral from Add at Calyon based on the expected buyout.

• Thomas Weisel downgraded Avaya Inc (NYSE: AV) to Underweight from Market Weight based on increased concerns that shares are not sufficiently discounting transition risks associated with AV's strategic shift from telephony hardware to software and applications, driven by the shift towards VoIP from TDM technology.

• JP Morgan removed Dover Corp (NYSE: DOV) from its Focus List.

• Baird downgraded PRA International (NASDAQ: PRAI) to Underperform from Neutral following a disappointing Q4 report.

• Syniverse Holdings Inc (NYSE: SVR) was downgraded to Market Perform from Outperform at Raymond James and Avondale Partners; Kaufman Bros cut Syniverse to Hold from Buy, while Bear Stearns downgraded Syniverse to Underperform from Peer Perform.

• Roth Capital downgraded Shuffle Master (NASDAQ: SHFL) to Hold from Buy.

• Lazard cut Overseas Shipholding Group (NYSE: OSG) to Hold from Buy.

Analyst downgrades 2-28-07: Lockheed Martin enters more challenging waters originally appeared on BloggingStocks on Wed, 28 Feb 2007 11:20:00 EST. Please see our terms for use of feeds.

• Morgan Joseph started Acorda Therapeutics Inc (NASDAQ: ACOR) with a Sell rating and $15 target citing seizure rates for Fampridine-SR and limited efficacy for its rating.

• Coach, Inc (NYSE: COH) was started at Soleil with a Buy rating and $58 target; the firm believes continuing market share gains should create a long-term EPS growth rate of 23%.

• Morgan Stanley initiated Time Warner Cable (OTC: TWCA) with an Equal Weight rating.

• Raymond James started Legacy Reserves LP (NASDAQ: LGCY) with an Outperform rating and $27 target.

• Wedbush initiated Avaya Inc (NYSE: AV) with a Hold rating and $14 target.

• Nollenberger initiated Rudolph Technologies Inc (NASDAQ: RTEC) with a Buy rating and $26 target, citing valuation.

• Precision Drilling Trust (NYSE: PDS) was initiated at CIBC with a Sector Performer rating.

• Lehman Brothers started Polo Ralph Lauren Corp (NYSE: RL) with an Overweight rating and $100 target.

• Bank of America reinstated The Nasdaq Stock Market Inc (NASDAQ: NDAQ) with a Neutral rating and $33 target.

Analyst initiations 2-21-07: Coach & Avaya initiated today originally appeared on BloggingStocks on Wed, 21 Feb 2007 11:32:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY: Hansen Natural (HANS), CVS Corp (CVS) and Career Education (CECO) top today's extensive list of downgrades.

• Hansen Natural Corp. (NASDAQ:HANS) was removed from Goldman Sachs Conviction Buy List due to the lack of near-term catalysts.
• CVS Corp (NYSE:CVS) was removed from the Focus List at Merrill Lynch.
• Career Education Corp. (NASDAQ:CECO) was downgraded to Hold from Strong Buy at Matrix USA due to the declining environment that is leading to slower sales growth.

OTHER DOWNGRADES:

• A.G. Edwards downgraded Westwood One, Inc (NYSE:WON) to Sell from Hold as fundamentals are not stabilizing. Deutsche Bank also downgraded the media programmer to Hold from Buy.
• Avaya, Inc. (NYSE:AV) was downgraded to Market Perform from Outperform at Morgan Keegan.
• Finally, Potash Corporation of Saskatchewan, Inc. (NYSE:POT) was downgraded to Neutral from Buy at UBS on valuation.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Analyst downgrades 11-10-06: Hansen Natural and CVS downgraded originally appeared on BloggingStocks on Fri, 10 Nov 2006 11:49:00 EST. Please see our terms for use of feeds.