Legendary private equity firm Kohlberg Kravis Roberts & Co. (KKR) likes to buy crusty old companies at low prices, repackage them, and, ideally, sell them for a higher price. This was the case with its latest deal, in which KKR announced that it is off-loading Tenovis for $635 million to Avaya (NYSE:AV). KKR likes cash, so it is taking $370 million in Uncle Sams and shifting $265 million in liabilities to Avaya.

Like its competitors, Avaya came close to oblivion, but it has been able to turn things around, and the company has generated $350 million in operating cash flow for the first nine months of 2004. The firm is even returning to its M&A roots. For example, it recently plunked down $103 million in cash for Spectel, a teleconferencing business.

As for Tenovis, which is based in Frankfurt, Germany, it has the hallmarks of being a crusty company. After all, it was founded in 1899 as a telephone system rental business. Now the company is a leader in providing voice and data communications technologies, primarily in Europe.

The deal should pump up revenues by about $1 billion for Avaya. The deal will also be accretive by $0.07 per share in fiscal year 2006, although dilutive by $0.03 per share in fiscal year 2005.

So why should this acquisition enhance growth for Avaya? It's really about voice over Internet protocol (VoIP), which Nortel (NYSE:NT), Cisco (NASDAQ:CSCO), Lucent (NYSE:LU), and many others are scrambling over. Basically, the acquisition of Tenovis is a play for market share, giving Avaya penetration in small to midsize businesses in Europe. No doubt, this is prime territory for VoIP growth.

Fool contributor TomTaulli does not own the shares mentioned in this article.