SHARE



ABOUT THE AUTHOR


Beth Schultz
Beth Schultz is editor of No Jitter and program co-chair for Enterprise Connect. Beth has more than two decades of...
Read Full Bio >>
SHARE



Beth Schultz | July 08, 2016 |

 
   

Mitel Out as Polycom to Go Private

Mitel Out as Polycom to Go Private As Polycom accepts competitive offer from private equity firm Siris and Mitel waives matching rights, this hot acquisition deal comes to an abrupt end.

As Polycom accepts competitive offer from private equity firm Siris and Mitel waives matching rights, this hot acquisition deal comes to an abrupt end.

Little more than a week ago, Mitel CEO Rich McBee told Bloomberg TV that he expected his company's gambit to acquire Polycom to close "sometime in early August" following a July 29 shareholder vote. But as we learned this morning with news that private equity firm Siris Capital Group would instead be buying Polycom, it turns out McBee's confidence was misplaced.

Siris bested Mitel's $1.96 billion offer, announced April 15, with a deal valued at about $2 billion in cash, or $12.50. Pending shareholder and regulatory approvals, Polycom said in an official press statement it expects this acquisition to close in third-quarter 2016.

Mitel, in its own official press statement, announced that it had received notice of the competitive offer from Polycom and has opted to waive its matching rights. And so, rather than walking away with a suite of conferencing and phone products, engineering prowess, and a global network of channel partners, as No Jitter reported at the time of the initial bid, Mitel instead pockets a $60 million termination fee.

While expressing his disappointment that "this particular transition will not move forward," McBee explained the company's decision not to exercise its matching rights: "Mitel shareholders, customers and employees know that we follow a rigorous and disciplined approach to mergers and acquisitions. The agreement announced on April 15 resulted from a detailed due diligence and negotiation process that we feel accurately determined fair value for Polycom. We feel it would not be in the best interest of Mitel shareholders to adjust the existing agreement."

Perhaps he's already onto Mitel's next target. "I am confident in Mitel's future as an industry leader and as a market consolidator," his official statement continued.

If you do the math, it's hard not to think Polycom's decision to accept the Siris offer and take itself off the public market had more to do with factors beyond the immediate dollars and cents of the deal. Subtract the $60 million payout from Siris's $2 billion offer and the result, $1.94 billion, falls shy of the $1.96 billion Mitel offer that had been on the table. With Polycom being one of Microsoft's most significant technology partners for UC, its ownership by a competitor in enterprise communications no doubt could create a rather sticky situation -- no matter how much everybody might have agreed to play nicely together to best serve customers. Polycom is also a key supplier to many cloud communications providers who compete with Mitel in the UCaaS space--another complication.

Industry watchers are at odds about whether this is all for the best or not. While Zeus Kerravala, principal analyst with ZK Research, called the failed Mitel-Polycom merger "unfortunate," for example, Wainhouse Research co-founder Andrew W. Davis said the "good" of the deal was never easy to discern in the first place (see Kerravala's earlier posts "Mitel Finally Acquires Polycom" and "Mitel Merger: Polycom UCaaS Partners Need Not Fret," as well as "Mitel Acquires Polycom -- the Good, the Bad, and the Ugly,") which Davis co-wrote with Ira M. Weinstein, senior analyst and partner at Wainhouse.

"Rich McBee's thesis is correct in that the communications industry is dominated by not one but two 800-pound gorillas, making it difficult for the small vendors to compete. A Mitel-Polycom merger was the right thing for both companies and the industry as it would have created a third vendor of size," Kerravala said.

However, he added, "I applaud Mitel ... for not overpaying for the Polycom asset -- while it would have made a nice addition, there are other options to pursue."

In an official statement, Siris Executive Partner Dan Moloney cited the industy's transition from an on-premises to cloud model as an impetus for the Polycom deal and noted the company's fit with Siris' "investment focus on mission-critical telecommunications businesses." Collaboration provider PGi is among the other UC-related companies Siris has taken private.

Despite having wanted the Mitel-Polycom merger to proceed, Kerravala noted that going private should be advantageous for Polycom. "It lets them take a step back and aggressively pursue a mobile- and cloud-first approach without having to worry about quarterly numbers."

That said, Davis said, seeing how Siris reorganizes the Polycom team will be "interesting."

This is an updated version of our original posting.

Follow Beth Schultz and No Jitter on Twitter and Google+!
@nojitter
@Beth_Schultz
Beth Schultz on Google+





COMMENTS



Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

November 1, 2017

Your customers (internal and external) demand that you offer them the ability to connect by any means. With the adoption of cloud communications tools you now have access to an expanded portfolio o

October 18, 2017

Microsofts recent Ignite event had some critically important announcements for enterprise communications. Namely, Microsofts new Team Collaboration offering, Teams, will be its primary communicatio

September 20, 2017

Customer experience can make or break your business. But how do you achieve outstanding customer service when you're dealing with outdated organizational structure, lagging technology, dated proces

September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.