Polycom Inc (NASDAQ: PLCM) announced to be bought by Siris Capital Group in a $2 billion deal, including debt, after ending the previous deal with Mitel Networks Corporation announced in April. The new deal, following a similar acquisition of collaboration software provider Premiere Global Services Inc. by Siris Capital last year, is expected to close in the third quarter and Polycom Inc will pay $60 million termination fee to Mitel Networks Corporation.
The previous deal with Mitel was announced in April. According to the deal, Mitel was going to pay Polycom’s shareholder $3.12 in cash and 1.31 shares of Mitel per Polycom share. However, Polycom received a higher offer on July 7, and Mitel was unwilling to negotiate again. Polycom called off the stockholder meeting used to vote on the Mitel deal. Mitel said that it was disappointed that the deal was ended, but adjusting the previous agreement is not in the best interest of Mitel’s shareholders.
According to a statement released on Friday, Siris Capital will offer $12.5 per share in cash, representing a 14% premium to Mitel’s bid. Siris Capital also said that the new deal with Polycom fits well into its investment focus of buying “mission-critical telecommunications businesses.”
The new deal with Siris Capital Group may be a better outcome for Polycom. Cooperating with Siris Capital Group instead of Mitel allows Polycom to maintain an independent position in “both the video and voice and point business”. Just as Tavis McCourt, a Raymond James’ analyst, said in a note, “The Mitel and Polycom combination brought with it significant longer-term strategic risks that may have impacted Mitel’s chance of success long term, while maintaining its independence from a telephony/call processing platform such as Mitel will enable Polycom to maintain its neutral/third party position in both the video and voice and point business.’’
After the announcement of the new deal, shares of Polycom Inc increased 13.1% and Mitel shares rose 22% in premarket trading.