Canada's Mitel pays $1.96B for U.S. tech firm Polycom

Mitel Networks Corp. has a friendly deal to pay $1.96 billion US in cash and stock for Polycom Inc., a Silicon Valley company with global expertise in telephone and video conferencing and a much larger workforce around the world.

Ottawa-based Mitel — one of the original tech companies in what has been called Silicon Valley North — says Polycom will complement its own expertise in voice communications for business.

Because of the number of Mitel shares involved in the transaction, Polycom shareholders would end up with 60 per cent of the combined company's equity.

Polycom will also swell Mitel's workforce to 7,700 employees around the world — up from 1,300 at the end of 2015.

Headquarters will stay in Canada

But corporate headquarters would remain in Ottawa, the Mitel corporate name would be retained, its directors would still have a majority on the board and its chief executive and its chief financial officer would remain in those roles.

"Mitel has a simple vision — to provide seamless communications and collaboration to customers," Mitel CEO Rich McBee said in a statement.

It's offering Polycom shareholders $3.12 cash and 1.31 Mitel shares for each share of Polycom stock, or the equivalent of $13.68 based on the recent value of Mitel's stock.

That would be 22 per cent above Polycom's stock value prior to an April 5 news report that a deal was in the works. The stock portion of the offer would also entitle Polycom to have two representatives on the Mitel board of directors.

Mitel's board currently has seven directors, including McBee and Mitel co-founder Terry Matthews, who is chairman of the board.

The deal is subject to shareholder and regulatory approvals, but it's expected to close in the third quarter.

There have been reports that Elliott Management, which owns minority stakes in both companies, had been calling for months for a merger of the two companies.

"Together, Polycom and Mitel expect to drive meaningful value for our shareholders, customers, partners and employees around the world," said Polycom president and CEO Peter Leav.

"We look forward to working closely with the Mitel team to ensure a smooth transition and continued innovation to bring the workplace of the future to our customers."

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