Genband, Sonus to Merge
Companies get equal shares of combined entity in $745 million deal.
Confirming industry speculation that had bubbled up as recently as last week, Sonus Networks and Genband today announced a merger agreement valued at approximately $745 million.
The goal of the merger, as stated in the announcement release, is to create an entity "better positioned to enable network transformations to IP and cloud-based networks" for the enterprises and communication service provider markets each company has served individually. At times competitive -- think session border controllers, WebRTC, and media gateways, for example -- Sonus and Genband nevertheless diverge in their product strategies. Genband, for example, offers UCaaS (white-labeled) for enterprises as well as a cloud communications platform as a service, called Kandy. It's also ventured into next-generation communications for service providers, such as network functions virtualization (see "Genband Lights Up Next-Gen Plans"). Sonus, on the other hand, is known for its SIP, policy- and security-oriented lines, though it also sells to service providers.
As one, Sonus and Genband will be better able to address market needs with "a broader and deeper global sales footprint, increased ability to invest in growth, more efficient and effective R&D, and a comprehensive real-time communications product offering," the companies stated in their joint press release.
Per terms of the agreement, Sonus and Genband shareholders will each own approximately 50% of the combined company.
According to the press statement, combined 2016 revenue and EBITDA for the two companies have been approximately $680 million and $50 million, respectively, excluding synergies and "prior to any impact from purchase accounting." The companies also stated that the merged entity "is expected to realize annual cost synergies of $40 million to $50 million by the end of 2018 and to drive solid cash flow from operations in the first year after closing." In addition, they said they expect the new company to generate at least $100 million in annual EBITDA, with fiscal year 2020 EBITDA projected to be approximately $140 million.
The merger, pending shareholder approval and other standard review procedures, is expected to close the second half of 2017. Sonus CEO Raymond Dolan will head the merged company while Genband CEO David Walsh will oversee the Kandy business unit.