Avaya Pays £147m To Acquire Radvision

After much speculation and rumours, it has been confirmed that Avaya acquiring Radvision, which will give it video collaboration capabilities to add to its unified communications portfolio and be a boon to its data networking business.

Executives from Avaya and Radvision announced the $230 million (£147m) deal 15 March, several months after news first broke that the two companies were in negotiations, and a day after reports circulated saying the deal was imminent.

Cisco Targeted

Avaya, whose Session Initiation Protocol- (SIP-) based Aura platform is the technological foundation of its unified communications (UC) portfolio, has in the past relied on partnerships with the likes of Polycom to offer high-end video collaboration capabilities to its customers.

With Radvision and its telepresence and video conferencing products in hand, Avaya will now be able to offer an integrated and open UC offering that features video collaboration capabilities for everything from the conference room to mobile devices like smartphones and tablets, according to officials. It also will put Avaya into even more direct competition with the likes of Cisco Systems, both in unified communications and networking.

With the deal, the company can “now provide customers with a single, total solution from Avaya,” Nick Francis, vice president of sales for Avaya’s Video Collaboration group, said in a conference call with journalists and analysts.

That will be important going forward, given the rising demand from customers for greater integration of voice, video and the Web in their UC solutions and the growing number of computing devices being used in business today, said Gary Barnett, senior vice president and general manager of collaboration infrastructure for Avaya.

Radvision offers a host of video collaboration products, including its Scopia portfolio, as well as management capabilities. Radvision CEO Boaz Raviv spoke about the company’s 20 years in the video conference and UC markets. However, the vendor took a serious hit in 2010, when partner Cisco Systems bought rival Tandberg for $3.3 billion (£2.1bn). Radvision has struggled to regain its financial edge since, and while rivals such as Polycom and Cisco have flourished in a booming video collaboration space, Radvision has seen its financial fortunes stall.

In the fourth quarter of 2011, Radvision lost $4.4 million (£2.8m), with revenues dropping to $21.8 million (£13.9m), almost $5 million (£3.2m) less than the same period in 2010. During the same quarter, Polycom’s revenues jumped to a record $407 million (£260m), more than $100 million (£64m) more than in the fourth quarter in 2010.

Deal Welcomed

IDC analysts are expecting the video conferencing market to hit $3.2 billion (£2bn) in 2012, a jump from the $2.7 billion (£1.7bn) in revenues in 2011.

Analysts applauded the Avaya-Radvision deal, saying it will give Avaya an even more complete UC portfolio at a time when customers are looking for more integrated solutions.

“These two technological powerhouses have the combined brainpower to put together some of the most advanced unified communications solutions in the world,” Forrester analyst Henry Dewing said in a post on the market research firm’s blog. “Combining Radvisions’s experience with building complex modular communication components with Avaya’s strength at delivering complete, reliable communications solutions is an appealing combination.”

For Avaya, it means a more complete solution that also gives it greater capabilities in the cloud, Dewing said. However, there are challenges, from merging two difference company cultures to finding ways to increase revenues to justify the $230 million price, which he said was about three times Radvision’s annual revenues.

Avaya officials expect the deal to close in the next 90 days.