Is Genesys about to acquire Avaya?

Is Genesys about to acquire Avaya?

There is strong speculation that Genesys is about to acquire Avaya after Reuters reported that Genesys is currently in talks with Avaya to acquire its contact centre business for an estimated $4 billion.

This comes as no surprise as earlier this year it was reported that Avaya’s were looking to sell off their contact centre business and just last week we reported that Avaya has appointed their fourth local Managing Director in two years.

With a large number of contact centres in Australia using the Avaya and Genesys platforms, this will certainly have an impact locally, as well as having a massive impact on the global contact centre software market.

Stay tuned.

Update: Well Genesys did acquire a business but it wasn’t Avaya with Genesys acquiring Interactive Intelligence for $2b USD in 2016.

Avaya has continued to operate as its own entity albeit with some financial difficulties including filing for bankruptcy protection under Chapter 11 in early 2017.

On December 15, 2017, it once again became a public company, trading under the stock ticker AVYA

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REUTERS: Genesys Telecommunications Laboratories Inc, a U.S. provider of call centre software, is in talks to acquire the contact centre business that its peer Avaya Inc is hoping to sell for more than US$4 billion, according to people familiar with the matter.

The deal would create a call centre technology powerhouse in the face of intensifying competition from Cisco Systems Inc, Huawei Technologies Co Ltd and Mitel Networks Corp.

The sale would also see Avaya, one of the world’s biggest providers of telephony systems, shed a major part of its business to cope with its debt pile, which has grown to US$6 billion.

Genesys is one of many companies and private equity firms that have contacted Avaya about a potential deal, and there is no certainty that it will successfully negotiate a deal, the people said this week.

The sources asked not to be identified because the negotiations are confidential. Genesys and Avaya declined to comment.

A deal for Avaya’s contact centre business, which powers the customer care and sale operations of some of the world’s biggest companies, would come on the heels of a US$900 million investment by buyout firm Hellman & Friedman LLC in Genesys last month.

That deal, which saw Hellman & Friedman join Permira Advisers LLP and Technology Crossover Ventures as investors in the company, valued Genesys at US$3.8 billion, including debt. Genesys has more than 4,700 customers in 120 countries.

Based in Santa Clara, California, Avaya provides software, hardware and cloud services to businesses for their telecommunications needs. Last year, it had over 300,000 customers, including 83 per cent of the Fortune 500 companies.

Avaya has been generating strong cash flow, with adjusted earnings before interest, taxes, depreciation and amortization last year reaching US$900 million.

However, its interest expense of more than US$400 million every year has been pushing it consistently into a loss. Much of this is the result of the debt the company took on in its US$8.2 billion leveraged buyout in 2007 by private equity firms Silver Lake Partners LP and TPG Capital LP.

Avaya now faces a US$600 million debt maturity that is due in October 2017, for which it needs to raise cash.

As a result, Avaya has been considering a sale of itself as a whole, as well as its different businesses, Reuters reported in May.

Avaya has announced it is being advised by Goldman Sachs Group Inc on evaluating expressions of interest in its assets, and by Centerview Partners Holdings LLC on “potential transactional alternatives” to shore up its capital structure.

Recommended further reading: The benefits of call centre technology for businesses

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