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Polycom (PLCM) Stock Up on New Takeover Bid from PE Firm
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Videoconferencing giant Polycom Inc. recently received a new takeover bid from an unnamed private equity (PE) firm. Notably, IP-based integrated communications solutions provider Mitel Networks Corp. had placed a bid of around $1.96 billion to acquire Polycom this April.
Although Polycom stated that its board of directors still supports Mitel's offer, it would also evaluate the new proposal whether it constitutes a superior offer for its shareholders. As a result, Polycom’s share price was up 6.49% on Nasdaq, yesterday.
The PE firm offered two options to Polycom. Under Option 1, Polycom stockholders would receive a cash dividend of $11 per share and the private equity firm would purchase $650 million in shares of a new convertible preferred stock of Polycom. Resultantly, the PE firm will get hold of a 56% stake of the company and the remaining 44% will stay with Polycom’s existing shareholders.
Under Option 2, the PE firm will make Polycom a private entity in an offer worth $11.5 per share in cash and a contingent value right worth up to $3 per share. In both cases, the cash dividend, existing debt and the $60 million termination fee to Mitel would be paid using proceeds from the sale of preferred stock, $870 million in new debt and available cash.
Per the Mitel deal, Polycom's shareholders will receive $3.12 in cash and 1.31 Mitel shares for each Polycom share they own, or $13.68 based on Mitel’s closing share price on Apr 13, 2016. As a result, Polycom shareholders will own 60% of the combined entity. The deal is expected to close in the third quarter of 2016, subject to shareholder and regulatory approvals and other customary closing conditions.
The Mitel and Polycom combination will be a major unified collaboration and communications service provider for small and mid-sized enterprises. The economies of scale achieved from the merger will help the enlarged company to cope with its larger peers like Cisco Systems Inc. (CSCO - Free Report) and Huawei Technologies Co. Ltd. in this market.
Notably, Polycom has an existing agreement with Microsoft Corp. (MSFT - Free Report) for supplying IP equipment to customers using Microsoft's Office 365 and Skype for Business products. The Mitel merger could further expand the scope of this contract. At present, Polycom is the only pure-play unified collaborative solutions provider and holds an estimated 32% market share.
Polycom currently carries a Zacks Rank #3 (Hold).
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Polycom (PLCM) Stock Up on New Takeover Bid from PE Firm
Videoconferencing giant Polycom Inc. recently received a new takeover bid from an unnamed private equity (PE) firm. Notably, IP-based integrated communications solutions provider Mitel Networks Corp. had placed a bid of around $1.96 billion to acquire Polycom this April.
Although Polycom stated that its board of directors still supports Mitel's offer, it would also evaluate the new proposal whether it constitutes a superior offer for its shareholders. As a result, Polycom’s share price was up 6.49% on Nasdaq, yesterday.
The PE firm offered two options to Polycom. Under Option 1, Polycom stockholders would receive a cash dividend of $11 per share and the private equity firm would purchase $650 million in shares of a new convertible preferred stock of Polycom. Resultantly, the PE firm will get hold of a 56% stake of the company and the remaining 44% will stay with Polycom’s existing shareholders.
Under Option 2, the PE firm will make Polycom a private entity in an offer worth $11.5 per share in cash and a contingent value right worth up to $3 per share. In both cases, the cash dividend, existing debt and the $60 million termination fee to Mitel would be paid using proceeds from the sale of preferred stock, $870 million in new debt and available cash.
Per the Mitel deal, Polycom's shareholders will receive $3.12 in cash and 1.31 Mitel shares for each Polycom share they own, or $13.68 based on Mitel’s closing share price on Apr 13, 2016. As a result, Polycom shareholders will own 60% of the combined entity. The deal is expected to close in the third quarter of 2016, subject to shareholder and regulatory approvals and other customary closing conditions.
The Mitel and Polycom combination will be a major unified collaboration and communications service provider for small and mid-sized enterprises. The economies of scale achieved from the merger will help the enlarged company to cope with its larger peers like Cisco Systems Inc. (CSCO - Free Report) and Huawei Technologies Co. Ltd. in this market.
Notably, Polycom has an existing agreement with Microsoft Corp. (MSFT - Free Report) for supplying IP equipment to customers using Microsoft's Office 365 and Skype for Business products. The Mitel merger could further expand the scope of this contract. At present, Polycom is the only pure-play unified collaborative solutions provider and holds an estimated 32% market share.
Polycom currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>