Polycom (PLCM): Is A Buyout By Siris Capital In The Cards?

The Polycom, Inc. (NASDAQ:PLCM) acquisition saga seems to be culminating with Siris Capital Group, LLC emerging as the winner. Siris Capital is expected to take over the voice, content collaborator for $2.0 billion in cash.

The deal proceedings will start once Polycom terminates the merger proposal from Mitel Networks Corp. (NASDAQ:MITL) and pays the required termination fees. IP-based integrated communications solutions provider Mitel had placed a bid of around $1.96 billion to acquire Polycom in April this year. Polycom was scheduled to hold a special shareholder meeting on Jul 29 to receive approval for the merger. However, since the company will be accepting Siris Capital’s proposal, the meeting has been called off. The Mitel proposal was rejected as Polycom’s board of directors perceived the Siris Capital offer to hold a “Company Superior Proposal” with more value.

Terms of the Deal

Siris Capital’s affiliates submitted a unilaterally binding offer for all of the outstanding shares of Polycom. Siris Capital will acquire Polycom’s shares for $12.50 per share if the deal is approved. The $2 billion also includes Polycom’s outstanding debt and boasts a 13.6% premium to Mitel’s offer as per Polycom’s share price on Jul 7. Notably, the Siris Capital proposal will remain in effect till Jul 15, 2016. The deal is subject to Polycom accepting the offer in addition to shareholder, regulatory approval and other customary closing conditions.

The transaction will be financed by Siris Capital through a combination of equity and debt. Siris along with its co-investors will be financing the equity portion while Macquarie Capital will provide debt financing.

The deal is expected to help expand Siris Capital’s portfolio of investments in the telecommunication and technology space while Polycom is poised to benefit from the investments made by a seasoned industry player.

Zacks Rank and Stocks to Consider

Polycom currently carries a Zacks Rank #3 (Hold). Investors could consider some better-ranked industry stocks such as Comtech Telecommunications Corp. (NASDAQ:CMTL) and Qualcomm Incorporated (NASDAQ:QCOM) , both with a Zacks Rank #2 (Buy).