Polycom (PLCM) Ends Mitel Networks Takeover, Will Merge With Siris Capital LLC

Shares of Polycom Inc. (PLCM) were trading up +1.48 or +13.62 percent to $12.35 in Friday’s premarket after news early this morning that the company would be acquired by Siris Capital Group, ending a previous merger agreement with Mitel Networks Corp. Polycom Inc. stock closed at $10.87, unchanged from its previous closing price in Thursday’s regular trading session.

Stock Analysis

San Jose, California based Polycom Inc. was co-founded by two former employees of PictureTel Corp, Brian L.
Hinman and Jeffrey Rodman in 1990. The company is a worldwide producer of content collaboration and communication technology, video and voice content, teleconference, telecommunications, as well as infrastructure and hardware services. Polycom offers secure video, voice and content solutions to more than 400,000 companies worldwide.

New York City based Siris Capital Group, LLC was founded in 2011 and is a privately held private equity firm specializing in special situations, turnarounds, distressed assets and mid-market buyout investments in the telecommunications, healthcare, data and technology sectors. The company looks for investments in the $250 million to $2 billion range and has over $2.4 billion in cumulative capital commitments.

This morning, Siris Capital Group, LLC and Polycom, Inc. entered into a unilaterally binding agreement for Siris Capital to acquire all outstanding shares of Polycom Inc. for $12.50 per share in cash. With Polycom’s outstanding debt, the enterprise value of the transaction comes to approximately $2 billion.

The deal is contingent on Polycom terminating a previous merger agreement with Mitel Networks Corporation (MITL), which offered to buy Polycom for $1.96 billion on April 15th, 2016.  Polycom’s board of directors determined that the Siris Capital offer was a “Company Superior Proposal” under the terms and agreement with Mitel.

This morning, Mitel Networks announced it had waived rights to match consideration or increase its offer to Polycom shareholders upon receiving notice from the Polycom board, and instead will receive a $60 million termination fee from Polycom concurrent with the termination of the agreement.

Once Mitel Networks receives the $60 million fee, which is expected later today, Polycom will enter into a merger agreement with Siris Capital with all outstanding common stock to be tendered to Siris Capital at $12.50 per share in cash, a +13.6 percent premium to Mitel’s current offer based on Polycom shares closing price on Thursday.

Dan Moloney, Siris Executive Partner stated in the company’s press release that, “The industry is transitioning to a hybrid on-premise and cloud-based Unified Communications environment. 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.”

Siris' offer will remain in effect until July 15th, 2016 and the transaction is still subject to the customary regulatory approvals, shareholder approval and other customary closing conditions. Siris has secured committed financing consisting of a combination of debt and equity with debt financing for the deal from Macquarie Capital.

Other News About PLCM

Polycom Payoff Is in the Long Game

Siris was identified as a suitor in early June, when the Polycom board was still urging shareholders to accept the Mitel offer.

Deandra Cassidy and Peggy Crespin of Polycom Named Two of the Power 100 in CRN’s 2016 Women of the Channel

The two Polycom employees will be in the Power 100, a subset of the prestigious Women of the Channel list.

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Published on Jul 8, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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