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Avaya Soars Amid Report Of A Possible Leveraged Buyout

Avaya Soars Amid Report Of A Possible Leveraged Buyout

Shares of telecommunications equipment maker and software vendor Avaya Holdings Corp (NYSE: AVYA) gained more than 30 percent Monday morning. The company is reportedly considering a $5 billion acquisition offer.

What Happened

Avaya's board of directors are examining an offer it received from a private equity group to sell itself for more than $20 per share, sources close to the matter told Reuters. The stock closed Friday at $13.23 per share with a market capitalization of $1.5 billion, while the reported offer values the technology company at more than $5 billion.

Avaya holds $3.2 billion in debt and emerged from bankruptcy protection just over a year ago. Nevertheless, the company was reportedly on the receiving end of several offers from multiple private equity firms over the past few months.

Why It's Important

Communications software and services accounted for more than 80 percent of its total $738 million revenue during the December-ending quarter, according to Reuters. Operating income rose from $38 million in the same quarter a year ago to $50 million. The company faces tough competition against much larger tech giants like Microsoft Corporation (NASDAQ: MSFT).

Sources close to the matter also told Reuters there's no guarantee any offer on the table will be approved by Avaya's board.

Shares traded at $17.50 Monday morning, up 32.2 percent for the session.

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