Summary
The fuss between Verizon and Avaya that is presented as an issue of national security is very possibly a move designed to influence the renegotiation of contracts between these two companies.
Analysis
It is hardly surprising that in a due diligence of Nortel's Enterprise Unit Avaya should have scrutinized the contracts with its major customers, notably Verizon, that Nortel has in place. I have no inside knowledge of the details, but perhaps Avaya has decided that it is in its interests to renegotiate some of these contracts following Nortel's bankruptcy, and in particular ones involving the U.S. Government as a customer. It would therefore be logical for Avaya for start from a position that it cannot honor these contracts, and then for Verizon to use all the tactics at its disposal to ensure either that these contracts continue as they are, or that any renegotiation has an outcome that is to their benefit or at least minimizes any advantage that Avaya may be able to obtain. Invoking the specter of a danger to national security resonates well in some quarters who may be able to influence the process of Avaya's acquisition of Nortel's Enterprise Unit. It would be ironic if the alleged threat to U.S. national security, in contrast for example to Huawei's bid to acquire 3Com, were effective in the context of a U.S. company's acquisition of a foreign competitor, rather than the other way around.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
