Gores Group Eyeing Polycom Deal

by Gaurav Kheterpal on March 27, 2010

Gores Group Planning to buyout Polycom

Gores Group Planning to buyout Polycom

After Cisco acquired Tandberg for $3.4 billion last year, Polycom remains the only sizable pure play provider in the video-conferencing equipment market. As expected, many private equity groups have been lining up one after another to acquire Polycom. The latest amongst these M&A speculations involves The Gores Group, a Los Angeles-based private equity firm, which has been strongly pushing for a merger between one of its portfolio companies and Polycom.

It’s been an eventful month for Polycom, which managed to ink a strategic deal with HP by replacing Norway’s Tandberg ASA (acquired by Cisco) as the preferred partner to sell HP’s video conferencing products. A couple of weeks back, Financial Times reported that Apax Partners, a London-based private equity group valued Polycom to be worth  more than #3 Billion and made a buyout offer of around $37 a share. Ever since then, Polycom shares have hit a 52-week high and the company’s market value is estimated to be around $2.5 billion. Both Polycom and The Gores Group have declined to comment on these speculations.  The talks between Apax and Polycom fell midway and Apax did not make an official offer for Polycom.

Siemens Enterprise Communications, a Gores Group had made an unsuccessful buyout attempt for Polycom last year as well. However, the deal did not go through. However, Polycom and Siemens Enterprise Communications did enter a strategic alliance in January this year. Now that Apax is out of contention, Gores Group has shown a keen interest in reviving talks with Polycom. A merger of Siemens-Polycom might emerge as a win-win situation for both companies where Polycom’s video conferencing expertise will be coupled with Siemens Enterprise’s focus on communications equipment. It also opens up the avenues for cost reduction and streamlined operation for both companies.

If Siemens Enterprise Communications does acquire or merge with Polycom, it’s surely bound to create a new powerhouse in the Unified Communication market space. Polycom’s strategic partners includes some of the biggest technology giants including Microsoft, Avaya, Juniper, IBM and Siemens. Polycom and Tandberg are the biggest players in the video conferencing products market, which is expected to nearly double to $3.8 billion by 2013, according to market researcher Gartner.

Polycom has been a subject of takeover speculations for a while now. Whether it’s The Gores Group or any other buyer, I believe that Polycom buyout is inevitable and I’d be very surprised if Polycom still exists as an independent pure play video conferencing vendor in 2011.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.com by: RSSTwitter,Identi.ca, or Friendfeed

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