Bethel Finance: Avaya in talks to acquire Radvision for $200m

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Bethel Finance news:
Sources inform ''Globes'' that Avaya plc (NYSE: AV) is in advanced talks to acquire video conferencing solutions developer Radvision Ltd. (Nasdaq: RVSN; TASE: RVSN) for $200 million, a 30% premium on yesterday's market cap.

The acquisition of Radvision would give Avaya a new business, where it would compete against Cisco Systems Inc. (Nasdaq: CSCO) and Polycom Inc. (Nasdaq: PLCM). However, it cannot be ruled out that other companies will open talks to acquire RadVision.

Zohar Zisapel owns 26.4% of Radvision and his brother, Yehuda, owns 6.3%. Radvision's share price rose 10% in the ten days through yesterday. The company's business has been going through rough times. Revenue totaled $56.2 million in January-September 18.2% less than in the corresponding period of 2010, and its net loss nearly quadrupled to $19 million. The company fourth quarter guidance is equally bleak: $18 million revenue, 31% less than for the corresponding quarter, and a net loss of $6.8 million.

This is not the first time that the Zisapels have been in talks to sell Radvision. Negotiations with Hewlett Packard Co. (NYSE:HPQ) a year ago broke down over a disagreement on the price.

Most of Radvision's problems are due to the acquisition by its largest customer, Cisco, of Norwegian rival Tandberg for $3.3 billion in late 2009. To compensate for the anticipated loss in revenue, Radvision acquired some of the assets of its Italian OEM partner Aethra for $10 million in cash in February 2010. The acquisition of Aethra's end-user equipment gave RadVision an end-to-end video conferencing solution. The acquisition has so far failed to compensate for the loss of Cisco, and Radvision has been losing money ever since.

RadVision's share price halved from the beginning of the year until the December rally. Its market fell to a low point of $88 million - less than its cash reserves of $92.5 million at the end of September. The share price rose 1.3% in early trading today to $8.53, giving a market cap of $160 million, after rising 16.1% yesterday. The share price rose 13.4% on the TASE today to NIS 31.15.

Yesterday, Radvision announced that Sydney-based general practice education and training provider GP Synergy Ltd. had installed the company's video collaboration technology. RadVision did not disclose the size of the deal.

In Israel, Avaya sells call centers to telecommunications carriers. Customers include HOT Telecommunication Systems Ltd. (TASE: HOT) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). Bezeq International Ltd. markets Avaya's IP telephony solutions to mid-sized companies, and sales have been good. Avaya collaborated with AudioCodes Ltd. (Nasdaq: AUDC; TASE: AUDC) on VoIP solutions for several years.

Radvision said in response, "We do not respond to rumors."