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Polycom has scrapped plans to be acquired by Mitel, after private equity firm Siris Capital Group snuck in with a last minute offer of $2bn (£1.52bn) cash.
Polycom is understood to have paid a termination fee of $60m as per the terms of the agreement with Mitel.
Activist hedge fund outfit Elliott Management played a key role in bringing Mitel and Polycom together, buying stakes in both firms and then playing the unrelenting cupid.
The original cash-and-stock deal offered a 22% premium to Polycom shareholders, who also would have owned three-fifths of the enlarged entity. However, the new – all-cash – deal represents a 13.6% premium on the current value of Mitel’s offer, based on the firm’s share price at the end of last week.
“The industry is transitioning to a hybrid on-premise and cloud-based unified communications environment,” said Siris executive partner Dan Moloney. “We believe that, as an independent private company, Polycom would be best positioned to continue its heritage as a best-in-class communications solutions provider to more than 400,000 companies and institutions, channel partners, and the evolving unified communications ecosystem.”
Mitel CEO Rich McBee said that the company had decided not to further pursue Polycom, stating that Mitel had ‘accurately determined fair value’ after extensive due diligence.
“While I am disappointed that this particular transaction will not move forward, I am confident in Mitel’s future as an industry leader and as a market consolidator,” he said McBee.
It seems that shareholders respected Mitel’s reluctance to pay over the odds, as well as the $60m cash injection. While Polycom’s share price increased nearly 13% following the news, Mitel’s shot up by a staggering 20%.