After months of speculation and discussion, a pair of enterprise communications giants have made it official — they’re joining forces. Mitel this week announced that it is acquiring Polycom for cash and stock valued at $ 1.96 billion.
The deal will result in a company that has 7,700 employees and combined sales of $ 2.5 billion. The deal also gives Mitel a combined portfolio of over 2,100 patents and more than 500 patents pending, according to the company.
The headquarters of the new company will be on Mitel’s home turf of Ottawa, Ontario. The company will operate under the Mitel name while retaining the Polycom brand. Polycom had been based in San Jose, Calif. The deal caps an acquisition spree by Mitel that included the previous purchases of Mavenir Systems Inc. and Aastra Technologies Ltd.
Long Courtship
Mitel said that its negotiations with Polycom have ongoing for almost 10 months. Earlier this month, reports indicated that some sort of deal between the two was forthcoming. Part of the idea behind the merger might be to create a company that can compete more strongly with Cisco, which itself has been busy on the acquisition front. In February, Cisco bought enterprise collaboration startup Acano for $ 700 million. Also, IBM recently acquired Ustream and Clearleap to strengthen its enterprise conferencing offerings.
The merger reflects a time when a growing number of enterprises are moving their communications services to IP networks and cloud-based services. As that happens, providers are consolidating to offer comprehensive services and compete with upstart providers.
Via other acquisitions, Mitel has tried to exploit those changing market dynamics. Mitel’s position is that combining its communications acumen with Polycom’s portfolio in the conference and video collaboration market will make it a leader in the industry.
“The communications and collaboration industry is undergoing a period of intense change that is rapidly redrawing the competitive landscape and breaking down barriers between previously discrete markets and technology domains,” said Mitel CEO Rich McBee (pictured above), in a statement.
Early Canada Tech Power
Founded in the early 1970s, Mitel was one of the companies to jump-start the growth of Canada’s technology industry. Under founder and chairman Terry Matthews, Mitel applied software and microprocessor technology to telecommunications, later expanding into semiconductors and business communications.
Mitel was in the news a few years ago for filing a patent infringement case against Facebook regarding its technology for calling up Web pages in text-based communications and its Internet telephony services. Facebook fired back with its own patent suits, and the two companies settled out of court in 2013.
In a conference call about the Polycom acquisition, Mitel CFO Steven Spooner maintained that the deal doesn’t constitute a tax inversion, the controversial practice in which a U.S. company merges with a foreign firm and moves its headquarters abroad to avoid higher corporate taxes in the U.S. New rules by the U.S. Treasury Department are aimed at avoiding such arrangements, and Spooner said Mitel was careful to abide by those rules.
Image Credit: Photo of Mitel CEO Rich McBee via Mitel.
