Private equity pushes Mitel out of Polycom deal

Merger called off after private equity group Siris Capital offered more money for the video-conferencing services supplier

The acquisition of video-conferencing company Polycom by unified communications (UC) supplier Mitel has been called off after private equity house Siris Capital Group offered $2bn (£1.52bn) for Polycom in an all-cash transaction.

This figure represents a premium of 13.6% on the current value of Mitel’s offer for Polycom, based on Mitel’s closing share price on Thursday 7 July. The offer was subject to Polycom terminating its agreement with Mitel.

Polycom is understood to have paid Mitel a termination fee of $60m to release it from negotiations.

Siris controls a number of investments in the tech sector, including application performance management specialist Stratus Technologies, and network access and mobile security provider Pulse Secure.

Siris executive partner Dan Moloney said Polycom fitted well with its investment focus on mission-critical communications businesses.

“The industry is transitioning to a hybrid on-premise and cloud-based unified communications environment,” he said. “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 president and CEO Rich McBee said that following notification of the superior offer on 8 July, Mitel had elected not to renegotiate its deal with Polycom.

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In a statement, he said Mitel had conducted extensive due diligence before making its initial offer of $1.96bn, which “accurately determined fair value” for Mitel. He said it would not have been in the interests of Mitel’s shareholders to make an issue out of it.

“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,” said McBee.

Polycom’s UK customers include NHS Cumbria and Lancashire, which is using a video-conferencing service to diagnose patients in rural areas at risk of strokes or heart attacks; the Royal College of Music, which uses video to connect pupils with musicians all over the world; and the British arm of Dutch brewer Heineken, which has created a ‘virtual campus’ connecting its London office with the Edinburgh office of Scottish & Newcastle, acquired in 2008.

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