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Nortel Enterprise: Siemens Gore to Bid Against Avaya

Tomorrow marks the deadline for entities to submit bids for bankrupt Nortel’s enterprise unit and blogger Mark Evans reports that “reliable sources” tell him Siemens Gore will indeed vie for the assets up for auction.

Up till now, Avaya has been the only bidder, having made its $475 million offer in mid-July.

But, for almost a month, it’s been apparent Siemens wants Nortel’s enterprise group too. In late July, the company formed Enterprise Networks Holdings, a joint venture with private-equity partner The Gores Group LLC to buy Nortel’s enterprise division. And today, if Evans’ sources are telling the truth, it seems Siemens is prepared to go to battle against Avaya.

There’s disagreement over which company would be better for Nortel’s dealers, customers and debtors.

Frost & Sullivan analyst Michael Jude told PHONE+ in August there’s “a lot” of product overlap between Nortel and Siemens, especially when it comes to lower-end PBXs.

“This might make for a confused transition as Siemens attempts to clean up the overlaps,” he said.

Siemens also is working to beef up its partner program while Avaya boasts a deeper hold in the indirect channel.

But, as Evans points out, a Siemens buy would keep most of Nortel’s Canadian and U.S. dealer and customer channels intact, “compared with Avaya’s bid in which the dealer and customer channels would be morphed into Avaya’s channels.”

There also is support from MatlinPatterson, a firm that owns $400 million of Nortel’s debt, for alternatives to an Avaya buyout. MatlinPatterson said in a recent court filing that Avaya would be required to do everything necessary to complete a Nortel transaction. That could take a long time, so the enterprise unit would continue to lose sales and, consequently, erode what’s left over for debtors and shareholders, Evans noted.


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