Mitel is to acquire Polycom in a cash and stock deal valued at $1.96 billion in a move that will create a unified communications and collaboration technology company with expected annual revenues of around $2.5 billion.
Mitel Networks Corp. , which sells cloud-based, on-premises (PBX) and hybrid voice and unified communications systems to enterprises and communications service providers, will integrate videoconferencing system vendor Polycom Inc. (Nasdaq: PLCM), though the latter's brand will be retained. The combined company, which will be based in Ottawa, Canada, will have about 7,700 staff and be run by Mitel CEO Rich McBee.
The deal will come as no surprise to anyone tracking either company, as activist investor Elliott Management (which owns stakes in both vendors) has been agitating for this deal since last November, when it issued a public letter arguing the economic and strategic case for a Mitel/Polycom merger. (See Mitel in M&A Maelstrom.)
In addition to driving economies of scale that will make a combined company more efficient (operational savings of $180 million by 2018) and profitable, Mitel and Polycom claim that the combined company will be the:
- #1 in business cloud communications
- #1 in IP/PBX extensions in Europe
- #1 in conference phones
- #1 in Open SIP sets
- #2 in video conferencing
- #2 in installed audio
In 2015, Mitel reported full-year revenues of $1.16 billion in 2015 and an operating loss of $10.2 million, while Polycom reported revenues of $1.27 billion and an operating profit of $86.1 million.
Mitel is no stranger to M&A: It acquired its way into the mobile core technology market with the acquisition of VoLTE and RCS (rich communications system) specialist Mavenir for $560 million in early 2015 and boosted its position in the voice platform market with the purchase of Aastra Technologies for C$392 million in early 2014. (See Mitel to Acquire Mavenir for $560M and Mitel to Buy Aastra for C$392M.)
The Mavenir deal also gave it a strong position in NFV, from which Mitel has been building since then as McBee explained to Light Reading recently in an exclusive interview earlier this year. (See CEO Chat With Mitel's Rich McBee.)
For more on Mitel, see:
- Mitel Unveils New Mobile Enterprise Tools
- Getting to NFV Everywhere
- T-Mobile Adds Video Calling to RCS Line Up
- Mavenir, T-Mobile Confirm US RCS Launches
— Ray Le Maistre, , Editor-in-Chief, Light Reading