Plantronics to Acquire Polycom for $2 billion
March 28, 2018
Plantronics to Acquire Polycom for $2 billion
Creating the communications and collaboration gold-standard so good ideas are seen and heard
- Accelerates and expands Plantronics vision and market opportunity to be the preferred
communications and collaboration touch point
- Creates the broadest portfolio of communications and collaboration endpoints for the $39.9B
UCC industry (Frost and Sullivan, 2018)
- Establishes critical relevance to create differentiation from insights and interoperability
- Expected to be immediately accretive to Non-GAAP EPS
- Expect $75 million in annual run-rate cost synergies within 12 months of transaction close
SANTA CRUZ, Calif., March 28, 2018 (GLOBE NEWSWIRE) — Plantronics (NYSE: PLT) and Polycom today announced that they have
entered into a definitive agreement under which Plantronics will acquire Polycom in a cash and stock transaction valued at $2.0 billion
enterprise value. The transaction has been unanimously approved by the boards of directors of both companies, is subject to regulatory
approvals and other customary closing conditions, and is expected to close by the end of the third calendar quarter of 2018.
Compelling Strategic Rationale
With the acquisition of Polycom, Plantronics will become the partner of choice for the communications and collaboration ecosystem.
- Accelerates Plantronics Strategy. Polycom brings a global leadership position in voice and video collaboration, accelerating Plantronics
vision of delivering new communications and collaboration experiences.
- Broadens Portfolio. With the addition of Polycom, Plantronics will have the broadest portfolio of complementary products and services
across the global communications and collaboration ecosystem, and the ability to create exceptional user experiences.
- Expands Market Opportunity. The combination positions Plantronics to capture additional opportunities across the $39.9B Unified
Communications and Collaboration industry driven by innovation in video and the ubiquity of audio, building growth opportunities
through data analytics and insight services.
- Augments Services Business. Polycom significantly expands Plantronics services offering, providing a meaningful presence in
management and analytics services.
Today’s news will further accelerate Plantronics vision of an enterprise that is able to leverage powerful analytics, video and audio
touchpoints to ignite all new communications and collaboration experiences. According to Joe Burton, President and Chief Executive
Officer, Plantronics, “With the addition of Polycom’s solutions across video, audio and collaboration we will be able to deliver a
comprehensive portfolio of communications and collaboration touch points and services to our customers and channel partners. This
will put Plantronics in an ideal position to solve for today’s enterprise collaboration requirements while capitalizing on market
opportunities associated with the evolving, intelligent enterprise.”
“Polycom has returned to growth by focusing on building strong ecosystem partnerships and delivering innovative, smart solutions for our
customers and partners,” said Mary T. McDowell, Chief Executive Officer, Polycom. “Bringing Plantronics and Polycom together will broaden
the breadth of solutions available to customers and partners and create a consistent end-user experience across many collaboration
applications and devices. As one company, Plantronics and Polycom will make it even easier for all customers to solve big-business problems
through human-to-human connections.”
“Siris recognizes the incredible opportunity in the Unified Communications industry and has been focused on building momentum in the
industry for several years,” said Frank Baker, Founder and Managing Partner, Siris Capital. “We are excited about the long-term value that the
combination of Plantronics and Polycom will create for customers, partners, stakeholders and employees.”
Polycom is a Leading Global provider of Communications and Collaboration Technologies
Polycom is privately held and has been an innovator in personal collaboration, group collaboration, and services (including customer
care, managed and professional services, and cloud services for interoperability, management, and analytics). For CY2017, Polycom had
GAAP revenue of $1.1 billion, Non-GAAP gross margin of 56.6%, Non-GAAP operating income of $183.1 million and Non-GAAP operating
margin of 16.0%.
Significantly Enhances Plantronics Long-Term Shareholder Value
The transaction is expected to be immediately accretive to Non-GAAP EPS. Plantronics targets achieving annual run-rate cost
synergies of $75 million within 12 months of transaction close.
Under terms of the definitive agreement, Plantronics will acquire Polycom for $2.0 billion enterprise value consisting of an estimated
$690 million of net debt and an estimated $948 million in cash and 6.352 million Plantronics shares, valued at $362 million based on the
20 trading day average closing price of Plantronics stock prior to signing, resulting in Polycom shareholders owning approximately 16.0%
of the combined company. Estimated amounts are subject to customary post-closing adjustments per the definitive agreement. Frank
Baker, Founder and Managing Partner, Siris Capital, and Daniel Moloney, Executive Partner, Siris Capital, will join Plantronics Board of
Plantronics intends to fund the cash portion of the consideration with cash on hand and approximately $1.375 billion in new, fullycommitted
debt financing. Wells Fargo Bank and affiliates have committed to provide the debt financing for the transaction, subject to
customary conditions. Plantronics expects to pay down a significant portion of the debt within the next several years with cash on the
balance sheet and through cash generation.
Wells Fargo Securities is acting as lead financial advisor to Plantronics and Foley & Lardner LLP is serving as legal advisor. Morgan Stanley
& Co. LLC is also serving as a financial advisor to Plantronics. Moelis & Company LLC and Macquarie Capital are acting as financial advisors
to Polycom, along with Sidley Austin LLP who served as legal advisor.
Effective April 1, 2018 Robert Hagerty, board member and Chairman of the Strategy and Mergers and Acquisitions committees, will
assume the role of Chairman and Marv Tseu will assume the role of Vice-Chairman of the Plantronics Board of Directors.
Plantronics announced that it is reaffirming its financial outlook previously announced in its third fiscal quarter 2018 earnings press
release dated January 30, 2018.
Conference Call Information
We have scheduled a conference call to discuss the Plantronics acquisition of Polycom. The conference call will take place today, March 28,
2018 at 8:00 a.m. EDT (5:00 a.m. PDT). All interested investors and potential investors in our stock are invited to participate. To listen to the
call, please dial in five to ten minutes prior to the scheduled starting time and reference conference ID #2385209 and the “Plantronics
Conference Call.” The dial-in from North America is +1 (888) 301-8736 and the international dial-in is +1 (706) 634-7260. The conference call
will also be simultaneously webcast in the Investor Relations section of our website.
A replay of the call with the conference ID #2385209 will be available until May 28, 2018 at +1 (855) 859-2056 for callers from North America
and at +1 (404) 537-3406 for all other callers.
Plantronics is an audio pioneer and a global leader in the communications industry. We create intelligent and adaptive solutions that
support our customers’ most important needs: experiencing and facilitating simple and clear communications while enjoying distractionfree
environments. Our solutions are used worldwide by consumers and businesses alike, and are an optimal choice for open office
environments. From Unified Communications and customer service ecosystems, to data analytics and Bluetooth headsets, Plantronics
delivers high-quality communications solutions that our customers count on today, while relentlessly innovating on behalf of their
future. For more information visit Plantronics.com.
Plantronics is a registered trademark of Plantronics. The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG,
Inc. and are used by Plantronics under license. All other trademarks are the property of their respective owners.
Polycom helps organizations unleash the power of human collaboration. More than 400,000 companies and institutions worldwide defy
distance with secure video, voice and content solutions from Polycom to increase productivity, speed time to market, provide better
customer service, expand education and save lives. Polycom and its global partner ecosystem provide flexible collaboration solutions for
any environment that deliver the best user experience, the broadest multivendor interoperability and unmatched investment
protection. Visit www.Polycom.com or connect with us on Twitter, Facebook, and LinkedIn to learn more.
- This press release, together with other statements and information publicly disseminated by Plantronics, contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended , including statements relating to: (i) potential accretion from the transaction; (ii) expected synergies; (iii) benefits
to our business that we expect from the combination; (iv) expectations regarding timing; and (v) expectations regarding debt
repayments, in addition to other matters discussed in this press release that are not purely historical data. We do not assume any
obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated
by such statements. Among the factors that could cause actual results to differ materially from those contemplated are:
- the ability to: (i) realize expected synergies or operating efficiencies in connection with the proposed transaction within the
expected time-frames or not at all and (ii) integrate Polycom’s business in a timely and cost-efficient manner without adversely
impacting operations, including new product launches;
- the effect of the announcement of the proposed transaction on (i) Polycom’s and Plantronics’ relationships with their respective
customers, suppliers and strategic partners and their operating results and businesses generally (including the diversion of
management time on transaction-related issues) and (ii) Polycom’s and Plantronics’ ability to retain and hire key personnel;
- the possibility that legal and regulatory enforcement matters that are pending at Polycom may adversely impact the results of
the combined company despite indemnification that Siris Capital is providing;
- the risk that the financing that Plantronics must receive to consummate the proposed transaction is not obtained on the terms
that we anticipate or that it is not available at all, which is magnified by the absence of a financing condition, and the risks
associated with the increased leverage that the company will have as a result of the transaction;
- the potential negative effects of the announcement of the proposed transaction on the market price of the company’s common
stock, particularly in light of the issuance of stock in the transaction;
- uncertainties associated with any aspect of the proposed transaction, including: (i) the risk that not all conditions to closing of
the proposed transaction will be satisfied or waived; (ii) uncertainties related to transaction costs; (iii) uncertainties related to
the anticipated timing of filings and approvals relating to the proposed transaction; and (iv) the possibility that the proposed
transaction does not close when expected or at all;
- risks relating to our financial reporting including those resulting from the adoption of new accounting pronouncements and
associated system implementation in the context of the transaction, our ability to forecast financial results of the combined
company and the risk that reporting system integration could impact our ability to make timely and accurate SEC filings;
- the potential impact of the transaction on our future tax rate and payments based on the consolidation of the global group and
our ability to quickly integrate foreign operations;
- the challenges of integrating the supply chains of the two companies;
- the potential that our due diligence did not uncover risks and potential liabilities associated with the acquired business;
- our ability to realize and achieve positive financial results projected to arise in the Enterprise market from UC adoption could be
adversely affected by a variety of factors including the following: (i) as UC becomes more widely adopted, the risk that
competitors will offer solutions that will effectively commoditize our headsets which, in turn, will reduce the sales prices for our
headsets; (ii) our plans are dependent upon adoption of our UC solution by major platform providers and strategic partners such
as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and Huawei, and our influence over such providers
with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to
integrate their platforms and product offerings with our solutions is limited; (iii) delays or limitations on our ability to timely
introduce solutions that are cost effective, feature-rich, stable, and attractive to our customers within forecasted development
budgets; (iv) our successful implementation and execution of new and different processes involving the design, development,
and manufacturing of complex electronic systems composed of hardware, firmware, and software that works seamlessly and
continuously in a wide variety of environments and with multiple devices; (v) failure of UC solutions generally, or our solutions in
particular, to be adopted with the breadth and speed we anticipate (vi) our sales model and expertise must successfully evolve
to support complex integration of hardware and software with UC infrastructure consistent with changing customer purchasing
expectations; (vii) as UC becomes more widely adopted we anticipate that competition for market share will increase,
particularly given that some competitors may have superior technical and economic resources; (vii) (viii) sales cycles for more
complex UC deployments are longer as compared to our traditional Enterprise products; (ix) our inability to timely and cost effectively
adapt to changing business requirements may impact our profitability in this market and our overall margins; and (x)
our failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UC
products are and will be integrated;
- volatility in prices from our suppliers, including our manufacturers located in China, have in the past and could in the future
negatively affect our profitability and/or market share;
- fluctuations in foreign exchange rates;
- the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key
- seasonality in one or more of our product categories;
- general global macroeconomic and geo-political conditions, including but not limited to, fluctuations in the stock markets
- slowdowns or downturns in economic conditions generally and in the market for consumer electronics, including voice, video
and content solutions.
For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities
and Exchange Commission on May 10, 2017 and other filings with the Securities and Exchange Commission, as well as recent press
releases. The Securities and Exchange Commission filings can be accessed over the Internet
Plantronics Investor Contact:
Manager, Investor Relations & External Reporting
+1 (831) 420-3168
Plantronics Media Contact:
Sr. Director, Global Communications & Content Strategy
+1 (831) 458-7537