Canadian communications vendor Mitel is swooping in from the North to gobble up embattled communications vendors Polycom in a cash and stock deal worth approximately $1.96 billion.
According to the terms of the deal, Mitel will pay Polycom stockholders $3.12 in cash and 1.31 Mitel common shares for each share of Polycom common share.
The acquisition is expected to close in the third quarter of this year. When the deal closes the new global headquarters for the combined company will be in Ottawa, Canada, though Mitel does intent to retain the Polycom name as a product brand. Mitel’s CEO Richard McBee will run the new combined organization, which will have a total employee headcount of approximately 7,700 employees.
“Polycom is one of the most respected brands in the world and is synonymous with the high quality and innovative conference and video capabilities that are now the norm of everyday collaboration,” Mitel CEO Rich McBee, said in a statement. ” Together with industry-leading voice communications from Mitel, the combined company will have the talent and technology needed to truly deliver integrated solutions to businesses and service providers across enterprise, mobile and cloud environments.”
Elliot Management, which holds equity stakes in both Mitel and Polycom is very supporting of the deal. Elliot manages funds with an approximate 9.7 percent stake in Mitel and a 6.6 percent stake in Polycom. Elliot Management first publicly disclosed its financial positions in Polycom and Mitel in October 2015.
“The combination of Mitel and Polycom makes perfect strategic and financial sense,” Jesse Cohn, senior portfolio manager at Elliott, said in a statement. “The combined business will have far greater scale than either company alone, the ability to deliver a full array of products to customers, and the means to invest behind product areas that will provide stability and growth for the future.”
Polycom has been struggling to define itself for the last several years in the wake of abrupt CEO departure in July 2013, with allegations of wrongdoing. Peter Leav took the post of Polycom CEO in December 2013.
In 2015, Polycom generated $1.27 billion in revenue, down from $1.35 billion in 2014. Net Income however grew in in 2015 to $68.9 million up from $42.1 million in 2014.
Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist