{"id":90866,"date":"2019-05-01T20:50:54","date_gmt":"2019-05-02T00:50:54","guid":{"rendered":"http:\/\/rbachnet.wwwmi3-ss40.a2hosted.com\/index.php\/"},"modified":"2021-08-24T12:25:48","modified_gmt":"2021-08-24T16:25:48","slug":"mitel-avaya-hook-up","status":"publish","type":"post","link":"https:\/\/rbach.net\/index.php\/mitel-avaya-hook-up\/","title":{"rendered":"Mitel – Avaya Hook Up?"},"content":{"rendered":"

Updated August 28, 2019 <\/strong>– Rumors confine to swirl about the future of Avaya. Channel Partners<\/em> is reporting there are 2 offers on the table. They cite reports from Bloomberg<\/a><\/em> that Avaya is considering a bid by Mitel and Reuters is reporting<\/a> that Avaya is considering an all-cash offer from private equity firm Clayton Dubilier & Rice<\/a>.<\/p>\n

Channel Partners<\/em> speculates that the Mitel-Avaya deal would “…result in a company with a market share that would rival key industry players Cisco and Microsoft<\/em>.\u201d<\/p>\n

—<\/p>\n

<\/a><\/strong>Avaya buy-out rumors<\/strong> are back. Last month it was thought<\/a> that a PE firm, possibly<\/a> Searchlight Capital Partners<\/a> was going to buy Avaya<\/a>. The unknown private equity firm<\/strong> valued Avaya at more than $5 billion, including debt.<\/p>\n

<\/a>The newest report is that Ottawa-based Unified-Communications-as-a-Service<\/a> provider Mitel<\/a> is looking to acquire Avaya<\/strong> in an all-stock merger valued at between $2.2 billion and $2.4 billion, according<\/a> to The Wall Street Journal<\/em><\/a>.<\/p>\n

The reported deal would value communications equipment and software provider Avaya at $20 to $22 per share, a premium based on its current stock price of about $18 per share on Monday 04\/29\/2019. If Avaya and Mitel are able to strike a deal, the merger could happen as soon as next month, the WSJ<\/em> said, citing mysterious people familiar with the matter.<\/p>\n

\"compete<\/a>CRN<\/em><\/a> says<\/a> that the Avaya-Mitel deal could help the two companies compete against their larger UC competitors<\/strong>. Mitel typically plays well in the small to midsize market, while Avaya has a large install base of enterprise customers because of its legacy in the UC hardware arena.<\/p>\n

Zeus Kerravala<\/a> at NoJitter<\/a><\/em> points out<\/a> that the reported $2 billion purchase price doesn\u2019t into account Avaya’s roughly $3 billion in debt<\/strong>. With debt included, the offer would have to come in for a total enterprise value of $5 billion to be of interest to shareholders.<\/p>\n

Mr. Kerravala believes that a successful merger between Avaya and Mitel would create a behemoth of a company, bringing the number two and number three voice vendors together. He cites Synergy Research Group<\/a> data that shows Cisco<\/a> (CSCO<\/a>) the leader with about 44% market share, Avaya second at 10%, and Mitel third at 8%. He believes a combined Avaya and Mitel would hold the industry\u2019s biggest installed base<\/strong>.<\/p>\n

\"Synergy<\/a>

Source: Synergy Research Group<\/p><\/div>\n

The merger would also be beneficial as the industry becomes more artificial intelligence<\/strong><\/a> (AI)-centric<\/a>, data and scale are must-haves. Mr. Kerravala believes Avaya and Mitel are stronger together than apart on AI. That said, if a deal doesn\u2019t happen, the companies should still be fine continuing down their current trajectories, optimizing their internal resources while leveraging partners for AI. They can still do this, although it would be easier as a bigger company<\/strong>.<\/p>\n

\"privateAn investment group led by private equity firm Searchlight Capital Partners acquired Mitel<\/strong> in April 2018 with a $2.6 billion deal that took the company private. Mitel has a history of growing via acquisitions. In 2017 the company completed the acquisition of competing UC provider<\/a> ShoreTel<\/strong><\/a> for $530 million. The move helped Mitel become one of the largest UCaaS providers in the world. The company lost out<\/a> on its deal to acquire videoconferencing provider Polycom<\/strong> in 2016 to Siris Capital Group<\/a>.<\/p>\n

rb-<\/strong><\/em><\/p>\n

This is just more of the same for Avaya. The crowning jewel in this deal is Avaya’s corporate call center business. Avaya\u2019s call center business is the product of the acquisition of Nortel<\/a> assets, after the Canadian networking giant’s bankruptcy in 2009<\/a>.<\/em><\/p>\n

This deal is really about the cloud. TechCrunch<\/a> notes<\/a> that Searchlight has a strategic stake<\/a> in Rackspace<\/a>, another legacy company that it took private for $4.3B in 2016<\/em>. <\/em><\/p>\n

Will Searchlight leverage its investments in Rackspace, Mitel, and now Avaya to build a cloud-based UCaaS juggernaut to take on the likes of Cisco<\/a>, Microsoft<\/a>, Slack<\/a>, RingCentral<\/a>, 8×8<\/a>, even Google<\/a> and Amazon<\/a>?<\/em><\/p>\n

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