Avaya Inc. (NYSE: AV) has accpeted a buyout offer of $8.2 billion from Silver Lake Partners and TPG Inc. The deal values Avaya at $17.50 a share, a 28% premium over the $13.67 a share the stock closed at before the buyout rumors began on May 29th.

Avaya is the world`s largest producer of corporate phone network equipment, and this all-cash leveraged buyout is the largest ever of a computer-network company.

Despite the rich price, Avaya is not without its problems. Increasingly, corporatations are moving away from tradition phone systems to internet-based systems. In 2006, Avaya reported only a 5% increase in sales to $5.15 billion, with $200 million in net income.

Avaya`s real appeal, especially compared to faster-growing corporate telephone rival Cisco Systems (NASDAQ: CSCO), is the vital patents it holds for Internet telephone technologies combined with being a cash cow - besides being debt free, Avaya generated more than $200 million in operating cash in the second quarter of this year.

Avaya, having had the premium mostly built into the stock price over the last week of speculation, is trading slightly higher at $17.07, up 2.09%.

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