Avaya, the US telecommunications equipment maker, said on Monday it agreed to be acquired by private equity firms TPG Capital and Silver Lake for $8.2bn.
Avaya shareholders will receive $17.50 in cash per share, a premium of about 28 per cent to its closing share price on May 25, when reports about a possible deal first emerged.
The private equity groups won the auction after they edged out Nortel Networks earlier on Monday.
Avaya, a former unit of Lucent Technologies, represents the latest bet by cash-rich private equity groups in a business at the intersection of telecoms and technology.
Once considered too risky for financial buyers, technology companies have become increasingly attractive as their businesses have matured and contracts with clients have become lengthy and recurring.
Last month, TPG, the Fort Worth-based private equity group run by David Bonderman and Jim Coulter, agreed to buy Alltel, the US wireless carrier, for about $27bn.
Shares of Avaya closed up nearly 4 per cent at $16.72 in New York on Monday prior to the official announcement of the deal.
Less than a year ago, the shares were trading well below $10.
Based in northern New Jersey, Avaya has been battling against Cisco Systems and others for domination of the burgeoning market for IP telephone systems, which rely on data networks to route phone calls inside companies.
But a sale would signal a belief within the company that Avaya was too small to compete effectively against its larger rivals.
Silver Lake is part-owner of SunGard, the software group that was among the first technology companies to go private in this dealmaking cycle, and NXP, the former chip unit of Philips Electronics.