Polycom Snubs Mitel Offer, Accepts Higher Bid

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in March-April 2016.**

Siris Capital Group on Friday thwarted Mitel’s acquisition of Polycom. The private equity firm plans to purchase the company for about $2 billion in cash.

Polycom’s board of directors unanimously determined the Siris offer to be “superior” to the Mitel transaction. Polycom also said it will promptly terminate its merger agreement with Mitel.

Polycom will pay Mitel a $60 million termination fee.

In mid-April, Mitel announced it was acquiring Polycom for approximately $1.96 billion in cash and stock. Mitel cited a period of intense change – and competition – in the unified communications and collaboration business as vendors infringe on one another’s traditional turf and startups seek to redefine collaboration.

Siris is paying $12.50 per share for Polycom, valuing the company at about $2 billion, including debt. That represents a premium of 13.6 percent to the current value of Mitel’s offer, based on Mitel’s closing share price as of July 7.

“Polycom has a 25-year history serving the audio and video collaboration needs of the most demanding enterprises and is a globally recognized brand synonymous with innovation and the highest quality,” said Dan Moloney, Siris executive partner. “We are very excited for the opportunity to partner with Polycom and its leadership team, as the company fits well with Siris’ investment focus on mission-critical telecommunications businesses.”

The industry is transitioning to a hybrid on-premises and cloud-based UC environment, he noted.

“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 UC ecosystem,” Moloney said.

Rich McBee, Mitel’s president and CEO, said the agreement announced in April resulted from a detailed due diligence and negotiation process that “we feel accurately determined fair value for Polycom.” Mitel declined to renegotiate.

“We feel it would not be in the best interest of Mitel shareholders to adjust the existing agreement,” he said. “While I am disappointed that this particular transaction will not move forward, I am confident in Mitel’s future as an industry leader and as a market consolidator. I wish our colleagues at Polycom, with whom we have worked closely for the past several months, ongoing success in the future.”

Last fall, activist investor Elliott Management Corp. made clear that it wanted Polycom and Mitel to team up to compete better with not only UC offerings from Cisco and Avaya but new challengers in the space, like Microsoft and Slack.

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