decor decor
"A noble purpose inspires sacrifice, stimulates innovation, and encourages perseverance."

-Gary Hamel

Extreme Networks to Acquire Avaya

Financial Information*
  • Enterprise Value                           $100M
  • EV/LTM Revenue                         N/A
  • EV/LTM EBITDA                          N/A
Transaction Facts
  • Following its original offer on March 7, Extreme Networks (Nasdaq: EXTR) announced yesterday that it has won the bid to acquire Avaya Inc.’s fabric-based secure networking solutions and network security solutions business, Avaya, for $100M. In accordance with the terms and conditions of the asset purchase agreement, the final agreement is expected to close on or after July 1, 2017, subject to customary closing conditions and regulatory approvals.
  • Extreme anticipates the transaction will be accretive to cash flow and earnings for its fiscal year 2018 beginning on July 1, and expects to generate over $200M in annualized revenue from the acquired networking assets from Avaya.
Adapting to a Changing Landscape
  • Shopping Spree: Founded in 1996, Extreme is the number three player in the enterprise data networking market behind Cisco and HPE and is the only pure-play networking provider. While Extreme has traditionally served the middle-tier, it has been strategically increasing its number of acquisitions in order to gain a bigger share of the larger scale enterprise market.
  • End-to-End: In March, Extreme entered into an agreement to purchase Brocade Communications Systems, Inc.’s data center networking business from Broadcom for $55M, including $35M in cash on close of the deal and $20M in deferred payments over a five-year period; the deal is expected to close this August. Last October, Extreme completed the acquisition of Zebra Technology’s wireless LAN business for $55M, giving Extreme a wireless LAN presence. The company recently reported the complete integration of Zebra’s technology and a boost of wireless partners as a result.
  • Higher Visibility: While Extreme Networks has traditionally focused on core enterprise networking technology, the Zebra acquisition gave Extreme a wireless LAN presence. Seeking to complete its end-to-end reach in a single combined platform within the next year, the Avaya acquisition would bring deployment simplicity, micro-segmentation and fabric technology with embedded security, while the Brocade portfolio would bring high-end data center networking along with visibility and automation.
  • Competitive Advantage: “With the consolidation of these companies, our position will only be strengthened against Cisco and HP,” said Extreme CEO Ed Meyercord, who plans to double the size of its partner program. Regarding his competition, Meyercord said, “We’re seeing HP becoming more commodity-like which opens doors for us to become more specialized for enterprise customers.”
  • Clear Exit: The U.S. Bankruptcy Court cleared Avaya’s sale on May 25. The company filed a Chapter 11 reorganization plan to reduce Avaya’s pre-filing debt by more than $4B. In January, when it declared Chapter 11, Avaya reported $3.6B in revenue for the year ending in September 30, 2016, down 9% from the previous year.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

03 Jan 2022

Office Depot Sells CompuCom Systems

 Financial Information ($USD) Transaction Value: ~ $305 million Enterprise Value: $1.72 billion EV/LTM Revenue: 0.19x EV/LTM EBITDA: 3.85x  Transaction Details The ODP Corporation (NASDAQ: ODP) announced that it has sold its CompuCom Systems subsidiary to an affiliate of Variant Equity in a transaction valued up to $305 million. The transaction consideration of up to $305 million consists...

29 Dec 2021

Happy Holidays – The 2021 martinwolf Annual Letter

Dear Clients, Partners, and Friends of martinwolf M&A Advisors,   I hope you all are having an enjoyable holiday season with family and friends.   It’s been my tradition in this annual end-of-year letter to spend time reflecting on the past year, and to look forward to what the next year holds for us. We have plenty...

20 Dec 2021

Oracle To Acquire Cerner Corporation

Financial Information ($USD) Enterprise Value: $28.3 Billion EV/LTM Revenue: 8.12x EV/LTM EBITDA: 17.71x  Transaction Details Oracle (NYSE: ORCL) today announced an agreement to acquire Cerner Corporation (NASDAQ: CERN) through an all-cash tender offer for $95.00 per share, or approximately $28.3 billion in equity value. Cerner is a leading provider of digital information systems used within hospitals and health systems to...