"We have determined that the sale of our businesses maximizes value while preserving innovation platforms, customer relationships and jobs to the greatest extent possible," said Nortel president and CEO Mike Zafirovski in a statement.
The deal includes Nortel's North American, Caribbean, Latin American and Asian Enterprise Solutions business as well as assets in Europe, Africa and the Middle East. The transaction would also include shares of Nortel Government Solutions Inc. and DiamondWare Ltd.
Known as a "stalking horse" agreement, Nortel must now file the deal with an American bankruptcy court, which will be followed by an auction allowed other bidders to submit superior offers. The company says a similar motion for the approval of the bidding procedures will be filed with the Ontario Superior Court of Justice.
Avaya said it expects these hearings will be held within the next couple of weeks.
Monday's announcement comes a day ahead of a deadline for final bids for Nortel's CDMA and LTE wireless businesses. Nokia Siemens has offered $650 million for these assets.
The news was welcomed by an organization representing more than 4,000 Nortel customers worldwide that believes the acquisition will allow the company to refocus its energy and resources on its solutions, and quiet concerns about the corporate structure that has beleaguered the company.
"The strength of the enterprise solutions portfolio has never been in question, and the Avaya acquisition could enable a more effective go-to-market strategy for these solutions and strengthen the market position of the company," said Victor Bohnert, executive director of the International Nortel Networks Users Association, in a statement.
Mr. Bohnert added that a survey taken after Nortel filed for bankruptcy found 80 per cent of members planned to proceed with Nortel purchases or deployments.
