Best-of-Breed Strategy Wins as Siri Overtakes Mitel in Polycom Bid
Polycom Inc. started off July with a bang when it announced that it is curtailing its deal to be bought by Mitel Networks Corp. and has cut a more preferable deal with Siris Capital.
Mitel, which bowed out of the deal, had planned to pay about $1.96 billion for Polycom. Private equity firm Siris Capital intends to pay about $2 billion.
This change of plans would seem to indicate that despite widespread consolidation in the unified communications space, some folks believe there’s still a viable path for best-of-breed companies to succeed.
“The industry is transitioning to a hybrid on-premise[s] and cloud-based unified communications environment,” noted Dan Moloney, Siris executive partner. “We believe that as an independent private company,
Polycom would be best positioned to continue its heritage as a best-in-class communications solutions provider to more than 400,000 companies and institutions, channel partners, and the evolving unified communications ecosystem.”
The musical chairs involving Mitel and Polycom are good news from all involved at the moment. Polycom and Mitel stock benefitted greatly from the news that they had cancelled plans for a combination. Polycom’s shares increased nearly 13 percent; Mitel’s went up 20 percent Friday. Mitel’s shares are up, according to a CNBC report referencing Summit Redstone analyst Jonathan Kees, because it’s getting $60 million in breakup fees, it doesn’t need to issue additional equity to fund the deal and it didn’t overpay to make the now-failed deal happen.
Before Mitel in April formally announced its intention to buy Polycom, rumors had long been circulating about an impending matchup between the two companies. Rumor had it last year that hedge fund Elliott Associates, which has stakes in both suppliers, was pushing for a combination of Mitel and Polycom.
While its deal to buy Polycom didn’t work out as planned, and its past efforts to purchase ShoreTel didn’t pan out, Mitel has had a string of successful acquisitions. In the past couple of years Mitel has bought Mavenir, contact center companies OAISYS and prairieFyre and desk phone companies Aastra and Inter-Tel.
Edited by Alicia Young