Avaya, Inc. (NYSE: AV) can still consider other bids despite an $8.2 billion agreement to be taken private and there are interested parties, according to a Prudential analyst.
Under its agreement with TPG Capital LLP and Silver Lake Partners, communications equipment maker Avaya Inc. (NYSE: AV) may pay up to $250 million to back out of the acquisition deal.
The deal is scheduled to be completed in the fall of 2007, subject to approval by shareholders and regulators. Avaya will have an opportunity take competing bids.
Avaya has a 50-day 'go shop' period to solicit other interests, and we believe that other parties remain interested in the company, Prudential's Inder M. Singh told clients on Tuesday. The $17.50/share, is near the company's highest share price post-bubble, and we would expect the shareholders to largely welcome the offer.
The telecommunications company cannot solicit proposals from additional third parties after July 24.
The firm has long been rumored as a takeover target, given its small size relative to others in the industry.
It has grown to be one of the leading competitors in IP telephony, boosting its market share to 21.4 percent in the first quarter of 2007, up from 12.2 percent in 2004. The figure brings it roughly even with Cisco Systems, Inc.
TPG Capital and Silver Lake agreed to pay $17.50 per share for Avaya, a 28 percent premium to the closing share price on May 25, when reports about a possible deal began to circulate
Shares of Avaya were nearly flat on Wednesday, gaining one cent, or 0.06 percent, to $17.04 in morning trading on the New York Stock Exchange.