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Blueface & Star2Star Seal $500M Unified Comms Merger

Iain Morris

Unified communications (UC) specialists Blueface and Star2Star are merging in a $500 million deal they say will create a "top five" player in the UC market.

While the deal is valued at $500 million, the companies have not disclosed any financial details of their merger. But the transaction will unite Ireland's Blueface with US-headquartered Star2Star to create an organization that can better serve the needs of enterprise customers globally, they say.

The tie-up will combine Blueface's highly regarded cloud voice platform with Star2Star's range of hosted and hybrid services, giving the new-look entity -- christened "StarBlue" -- a geographical reach the standalone players have lacked. Blueface says it currently has 20,000 customers globally, comprising companies of all sizes: Star2Star says it has thousands of customers but does not specify a number.

That should allow them to better address the needs of larger enterprise and wholesale customers, and compete more vigorously in the consolidating UC market.

The industry has seen a wave of mergers during the past few months, including a $1.9 billion takeover of UC provider BroadSoft Inc. by Cisco Systems Inc. (Nasdaq: CSCO) in October and a $530 million tie-up between Mitel Networks Corp. and ShoreTel Inc. in July. (See Cisco Announces $1.9B Deal for BroadSoft.)

StarBlue also faces competition from other big-name and specialist firms, including Microsoft Corp. (Nasdaq: MSFT), 8x8 Inc. (Nasdaq: EGHT), RingCentral Inc. and Vonage Holdings Corp. (NYSE: VG). Last year, both 8x8 and RingCentral were also reported to be on the lookout for potential buyers.

In the interests of business continuity, Blueface and Star2Star will, for the time being, retain their existing trading names and brands in their respective markets. The StarBlue brand seems likely to get introduced as and when new products and services are jointly developed and launched.

"In the not-too-distant future, we shall bring further enhanced innovation-led offerings across a full spectrum of products to our partners and customers and to the wider market which leverages the best of both companies' capabilities and talent," said Alan Foy, the CEO of Blueface, in a company statement.

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Foy is set to become CEO of the combined company, while Norman Worthington, the current CEO of Star2Star, will take up the executive chairman role.

The companies, which have a combined workforce of more than 500 employees, have also revealed that Nameer Kazzaz and Sergey Kalchenko, the chief technology officers of Blueface and Star2Star respectively, will share the CTO role in StarBlue.

Michelle Accardi, Star2Star's president and chief revenue officer, and John McGovern, Star2Star's chief financial officer, will keep their roles in the new-look business, while Brian Martin, Blueface's general manager, will be responsible for sales and operations across Europe following the merger.

The companies have also indicated that Star2Star's headquarters in Sarasota, Fla., will become StarBlue's headquarters, with Blueface's facilities in Dublin, Ireland, to be used as headquarters for the EMEA (Europe, Middle East and Africa) region.

As privately owned companies, Blueface and Star2Star do not disclose details of their earnings.

The BDO Capital Development Fund, a fund management business, said in March 2017 that it would invest €10 million ($12 million) in Blueface to support its international expansion plans. That appears to be Blueface's only investment round.

Star2Star closed a $30 million round led by NewSpring Capital in December 2014.

— Iain Morris, News Editor, Light Reading

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