Avaya-Nortel deal hits Canadian snag
The Avaya acquisition of Nortel's Enterprise Solutions division may have just gone over Niagra Falls. After meeting the approval of the U.S. Bankruptcy court judge and a Canadian court judge, it looked like the $915 million deal would see smooth sailing.
But Canadian authorities now have placed the deal under review, citing a provision in the "Investment Canada Act" that requires review of all foreign investments in Canadian companies exceeding $286 million. Industry Minister Tony Clement told Reuters that his agency will apply the "net benefit to Canada test" to the Avaya transaction, as it did in the Ericsson purchase of Nortel's wireless assets. The bid price is not the benchmark for review; however, the book value of the assets in question is.
If his officials find that the deal is not in the best interest of Canada, though, Avaya's bid could need to be modified or may be scrapped altogether. The good news for Avaya is that the Ericsson bid navigated this bizarre Canadian regulation without incident, with Clement finding that deal "very beneficial to Canada."
Though the deal may have gone over the Falls into Canadian territory, it appears likely it will be one of the few to do so successfully.
- see the Reuters article here