As many as 400 Nortel employees in Canada face layoffs in the sale of the company's enterprise division to Avaya, according to a report.

On Monday, N.J.-based Avaya Inc. won an auction for the Nortel Networks Corp. business unit, which had $2.4 billion in revenue in 2008. The company will pay $900 million US after earlier submitting a much lower, stalking-horse bid for the unit.

The deal is expected to close in December.

A court-approved takeover of Nortel Networks Corp.'s enterprise business could see as many of 40 per cent of the unit's workforce laid off, The Canadian Press reported Thursday. (Fred Chartrand/Canadian Press)

While Nortel has refused to provide any figures about its workforce or possible layoffs as a result of the takeover, The Canadian Press said Thursday that about 40 per cent of the unit's 1,000 employees could be forced out the door.

A source familiar with the deal said the hope is the number of layoffs will be lower, and says a decision is expected in the next month.

Nortel spokesman Jay Barta would only say it was premature to speculate on potential layoffs.

Gerard Carney, a spokesman for Avaya in Basking Ridge, N.J., said Thursday the company expected "minimal employee disruption" in Canada.

"We are committed to retaining as many jobs as possible and expect to retain a substantial number of employees and maintain the research facilities in Carling (in Ottawa) and Belleville," Carney said.

The unit's workforce is centred in Ottawa and Belleville, Ont., and has a small presence at a Toronto site.

On Tuesday, courts in Canada and the United States approved the Avaya takeover.

In January, the company that was once the biggest single company in the S&P/TSX Composite Index filed for protection from its creditors.

Any Avaya-related layoffs would come on top of the more than 5,000 layoffs the company has announced in recent months.

With files from The Canadian Press