Mitel Make a Bid for Avaya
Will Mitel successfully acquire its biggest UC rival?
UC Today reported earlier this month that multiple bids were imminent for global telecommunications giant, Avaya. Among the parties rumoured to be interested were Searchlight Capital Partners who acquired communication rival Mitel back in 2018 for around $2 billion. Now, after a report published today in the Wall Street Journal, it appears that Mitel’s interest in potentially acquiring Avaya and merging the two companies is more concrete.
The Journal report states that Mitel, and its financial backers, are looking to offer roughly $20 to $22 per share, valuing Avaya at well over $2 billion. This slightly exceeds the current expected value of proposed bids, rumoured to be imminent from other rival parties. Avaya’s stock value, at the time of reporting, has risen from the date when acquisition rumours initially circulated to its current price at just over $19 per share.
Potential rival bidders appear to come predominately from the private sector, but they may also hold complimentary unified communications portfolios. Apollo Global Management LLC own West Corp, who operate in unified communication and collaboration services and Permira Holdings own contact centre solution specialist Genesys. Although none of the potential bidders have publicly announced their intent it does appear that the successful candidate may well be revealed within the next few weeks.
Mitel has always pursued a strategy of acquisitions to extend and enhance its portfolio. It courted Polycom before losing out to a private equity firm and also purchased Shortel, in one of the industry’s larger deals, in 2017. Its move back into private hands with the Searchlight acquisition was widely reported to offer greater flexibility away from the gaze and financial scrutiny of Wall Street.
Any potential acquisition and merger would, of course, be subject to the usual selection of checks and balances, and in particular anticompetition legislation which the US Federal Trade Commission, FTC, might wish to explore. The current market share controlled by both Mitel and Avaya respectively, although substantial, wouldn’t appear to be significant enough to scupper any potential deal if the two entities were to combine. The vast majority of deals reviewed by the FTC and the Department of Justice are allowed to proceed after the first, preliminary review.
Both organisations, Avaya and Mitel, have seemingly struggled to transition their offerings from more legacy based technology to cloud and software services. We bought you the news recently that Mitel has partnered with emerging CCaaS disruptor Talkdesk, to provide part of its contact centre portfolio, and Avaya have publicly stated that 2019 was going to be targeted as its ‘Year of Cloud’. With Avaya and Mitel apparently going through similar structural and strategic realignment, combining the two entities might offer some synergies. There would however be several immediate areas of overlap between the two portfolios and the process of consolidation and unification may well be a long one.