Avaya Enters into Merger Agreement with Silver Lake and TPG Capital



    
    Transaction Valued at Approximately $8.2 Billion or $17.50 Per Share
    

    BASKING RIDGE, N.J., June 4 /CNW/ -- Avaya Inc. (NYSE:   AV) today
announced that it has entered into a definitive merger agreement with Silver
Lake, the leading investment firm focused on large-scale investments in
technology-driven growth industries, and TPG Capital, a leading private
investment partnership, for approximately $8.2 billion or $17.50 per common
share.
    Under the terms of the agreement, Avaya shareholders will receive $17.50
in cash for each share of Avaya common stock they hold, representing a premium
of approximately 28 percent over Avaya's closing share price of $13.67 on May
25, 2007, the last trading day prior to published reports regarding a
potential transaction, and a premium of approximately 33 percent over Avaya's
average closing share price of $13.17 during the 30 trading days ending May
25, 2007.
    "After an extensive review of Avaya's strategic alternatives with Avaya
management and our financial advisors, the board of directors of Avaya
determined that this transaction with Silver Lake and TPG provides the best
value for Avaya's shareholders," said Phil Odeen, non-executive chairman of
Avaya's board of directors.
    Avaya's board of directors has approved the merger agreement and resolved
to recommend that Avaya shareholders adopt the agreement.
    "In addition to delivering compelling value for our shareholders, the
partnership with Silver Lake and TPG also creates clear value for Avaya
employees and customers," said Louis J. D'Ambrosio, president and CEO, Avaya.
"The investment in our people and technology and the operating structure will
enable us to extend our technology and services leadership and continue to
deliver the "gold standard" of communication solutions in the industry." 23233
    "Our interests are aligned with the long-term interests of Avaya's
customers and employees," said David Roux, a co-founder and managing director
of Silver Lake. "We have full confidence in Avaya's excellent management to
build on the company's remarkable technology and history, which spans more
than a century, to deploy advanced IP communications solutions as a source of
competitive advantage for customers."
    "As one of the earliest private investors in technology and
telecommunications, TPG has come to know and admire Avaya for its roster of
leading customers, history of product innovation and commitment to customer
service," said John Marren, a partner of TPG.   "We look forward to working
with our partners at Silver Lake and the company's excellent team to continue
to build this exciting franchise."
    The transaction is expected to be completed in the fall of 2007, subject
to receipt of shareholder approval and customary regulatory approvals, as well
as satisfaction of other customary closing conditions.  There is no financing
condition to the obligations of the private equity group to consummate the
transaction, and equity and debt commitments for the merger consideration have
been received.
    The merger agreement provides for Avaya to solicit proposals from third
parties during the next 50 days.  In addition, the company may, at any time,
subject to the terms of the agreement, respond to unsolicited proposals. There
can be no assurance that this process will result in an alternative
transaction.  Avaya does not intend to disclose developments with respect to
the solicitation process unless and until its board of directors has made a
decision.
    Credit Suisse is serving as exclusive financial advisor to Avaya and its
board of directors.
    Weil, Gotshal & Manges LLP acted as legal advisor to Avaya in connection
with the transaction.  Skadden, Arps, Slate, Meagher & Flom LLP acted as legal
advisor to Avaya's board in connection with the transaction.
    Citi and Morgan Stanley acted as financial advisors to Silver Lake and
TPG and have committed, together with JPMorgan, to provide debt financing for
the transaction.
    Ropes & Gray is acting as legal advisor to Silver Lake and TPG.

    
    About the Transaction
    
    In connection with the proposed merger, Avaya will file a proxy statement
with the Securities and Exchange Commission.  Investors and security holders
are advised to read the proxy statement when it becomes available because it
will contain important information.  Investors and security holders may obtain
a free copy of the proxy statement (when available) and other documents filed
by Avaya at the Securities and Exchange Commission's Web site at
http://www.sec.gov.
    The proxy statement and such other documents may also be obtained for
free from Avaya by directing such request to Avaya Inc. 211 Mt. Airy Rd.,
Basking Ridge, NJ 07960 Attention: Investor Relations; Telephone:
908-953-7501.
    Avaya and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the solicitation
of proxies from its shareholders in connection with the proposed merger.
Information concerning the interests of Avaya's participants in the
solicitation is set forth in Avaya's proxy statements and Annual Reports on
Form 10-K, previously filed with the Securities and Exchange Commission, and
in the proxy statement relating to the merger when it becomes available.

    
    Forward Looking Statements
    
    This press release contains "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements give Avaya's current
expectations or forecasts of future events. These uncertainties and other
factors also include, but are not limited to, risks associated with this
transaction, including the occurrence of any event, change or other
circumstances that could give rise to the termination of the Merger Agreement,
the inability to complete the transaction due to the failure to obtain
shareholder approval or the failure to satisfy other conditions to completion
of the transaction, including the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the failure to obtain
the necessary debt financing arrangements set forth in commitment letters
received in connection with the transaction. Avaya undertakes no obligation to
update any of these statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Accordingly, any forward-looking statement should be read in
conjunction with the additional information about risks and uncertainties set
forth in Avaya's Securities and Exchange Commission reports, including Avaya's
annual report on Form 10-K for the year ended September 30, 2006 and its
quarterly report on Form 10-Q for the quarter ended March 31, 2007.

    
    About Avaya
    
    Avaya delivers Intelligent Communications solutions that help companies
transform their businesses to achieve marketplace advantage. More than 1
million businesses worldwide, including more than 90 percent of the FORTUNE
500 (R), use Avaya solutions for IP Telephony, Unified Communications, Contact
Centers and Communications-Enabled Business Processes. Avaya Global Services
provides comprehensive service and support for companies, small to large. For
more information visit the Avaya Web site: http://www.avaya.com.

    
    About Silver Lake
    
    Silver Lake is the leading investment firm focused on large scale
investments in technology, technology-enabled, and related growth industries.
Silver Lake seeks to achieve superior returns by investing with the strategic
insight of an experienced industry participant, the operating skill of a
world-class manager and the financial expertise of a disciplined private
equity investor. Silver Lake's mission is to function as a value-added partner
to the management teams of the world's leading technology franchises. Its
portfolio includes or has included technology industry leaders such as
Ameritrade, Avago, Business Objects, Flextronics, Gartner, Instinet, IPC
Systems, MCI, NASDAQ, Network General, NXP, Sabre Holdings, Seagate
Technology, Serena Software, SunGard Data Systems, Thomson and UGS. For more
information, please visit www.silverlake.com.

    
    About TPG Capital
    
    TPG Capital is the global buyout group of TPG, a leading private
investment firm founded in 1992, with more than $30 billion of assets under
management and offices in San Francisco, London, Hong Kong, New York,
Minneapolis, Fort Worth, Melbourne, Menlo Park, Moscow, Mumbai, Shanghai,
Singapore and Tokyo.  TPG Capital has extensive experience with global public
and private investments executed through leveraged buyouts, recapitalizations,
spinouts, joint ventures and restructurings. TPG Capital's investments span a
variety of industries including technology, financial services,
retail/consumer, media and communications, travel, healthcare and industrials.
Among TPG Capital's significant investments in telecommunications and
technology are Eutelsat Communications, Freescale Semiconductor, Intergraph,
Japan Telecom, Lenovo Group, MEMC Electronic Materials, ON Semiconductor,
Sabre Holdings, SunGard Data Systems, Seagate Technology, and the pending
acquisition of Alltel Corp.  Please visit www.tpg.com.





For further information:

For further information: Avaya Inc., media, Jim Finn, +1-650-868-9105,
or  jjfinn@avaya.com, or Lynn Newman, +1-908-672-1321, or 
lynnnewman@avaya.com, or investors, Matt Booher, +1-908-953-7500, or 
mbooher@avaya.com; Silver Lake, Matt Benson, +1-415-618-8750, or 
mbenson@sardverb.com, or Victoria Hofstad, +1-212-687-8080, or 
vhofstad@sardverb.com, both of Sard Verbinnen & Co., for Silver Lake; TPG 
Capital, Kristin Celauro of Owen Blicksilver PR, Inc., +1-732-433-5200, or 
Kristin@blicksilverpr.com, for TPG Capital Web Site: http://www.avaya.com    
             http://www.silverlake.com                  http://www.tpg.com

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AVAYA INC.

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SILVER LAKE

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