What happened

Shares of Avaya Holdings (NYSE:AVYA) dropped on Thursday after Bloomberg reported that the communications software company might abandon plans to sell itself in favor of a joint venture with RingCentral. Avaya issued a statement regarding its strategic review process Thursday, but it contained no details and did not deny the Bloomberg report. The stock was down about 12% at 12:35 p.m. EDT.

So what

Avaya has been exploring strategic alternatives, and it's reportedly held talks with private equity firms. In August, rumors emerged that the small-cap company had received a takeover bid from privately held Mitel Networks.

A notepad drawing of a fish eating a smaller fish.

Image source: Getty Images.

Citing people familiar with the matter, Bloomberg reported that the company is now in talks with videoconferencing provider RingCentral to form a joint venture and that it's leaning toward dropping any plans for a full sale.

The company's statement was bare bones. Avaya said that the strategic review process is ongoing and that it remains in advanced discussions. The company didn't take a full sale off the table, but it didn't dispute the Bloomberg report.

Now what

Avaya still expects the strategic review process to conclude by mid-September, which means some sort of deal could be revealed soon. Exactly what that deal will look like remains unclear.

Avaya stock has been cut in half since peaking in early 2018. A full sale at a premium to the current stock price would ease the pain a bit for investors, but that outcome might no longer be all that likely.