Mitel Announces Merger with Polycom

by Matt Klassen on April 19, 2016

Weinstein_MitelPolycomOn Friday Canadian telecom stalwart Mitel Networks announced that it had entered into a merger agreement with U.S. voice and telephony hardware manufacturer Polycom for $1.96 billion in cash and stock. The move effectively combines two cross-border leaders in communication and collaboration technologies, enhancing the combined company’s portfolio of products and services.

The newly formed company will retain the name Mitel while still distributing the Polycom brand, and will be based in Ontario. Polycom will own approximately 60 percent of this new entity, while Mitel will own the remainder.

But the merger of two significant telecom players aside, a look at the not-so-fine print of the deal and the added attraction of this deal becomes more readily apparent, that the merger will allow Polycom to be officially be located in Canada, thus reducing its overall tax burden; a huge attraction to investors (who seem to be the real winners in this deal).

While I can’t deny that the merger of Mitel and Polycom has interesting potential for growing the Canadian firm’s global telecom footprint, it was activist investor Elliot Management (an investor in both companies) who pushed hard for this deal, and, I would argue, ultimately the party that won the most.

But while I’ve long questioned the value of such activist investors, who always seem far more interested in raking in the profits while leaving a trail of destruction in their wake, this time things might be different, as there are strong reasons to want Mitel and Polycom together, tax burden and investors benefits aside.

“Mitel has a simple vision – to provide seamless communications and collaboration to customers. To bring that vision to life we are methodically putting the puzzle pieces in place to provide a seamless customer experience across any device and any environment,” CEO Rich McBee said.

“Polycom is one of the most respected brands in the world and is synonymous with the high-quality and innovative conference and video capabilities that are now the norm of everyday collaboration. Together…the combined company will have the talent and technology needed to truly deliver integrated solutions to businesses and service providers across enterprise, mobile and cloud environments.”

“Together, Polycom and Mitel expect to drive meaningful value for our shareholders, customers, partners and employees around the world,” Peter Leav, President and CEO of Polycom, said. “We look forward to working closely with the Mitel team to ensure a smooth transition and continued innovation to bring the workplace of the future to our customers.”

In the end, this is a landmark deal, one that has the potential to create a new global telecom powerhouse, a $2.5 billion revenue firm that has both the scale and the differentiated portfolio to effectively serve the evolving enterprise communications sector.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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