Plantronics picks up Polycom for $2B

Handshake business deal executives
Plantronics is acquiring troubled vendor Polycom $2 billion, furthering the consolidation of the unified communications and collaboration market. (Pixabay)

Plantronics is buying Polycom for $2 billion, consolidating two of the more well-known brands in the $40 billion unified communications and collaboration market. Plantronics believes the two companies' product lines are naturally complementary, but executives explained that the increasing adoption of cloud-based collaboration systems provided an additional impetus for the acquisition.

Plantronics is famous for its headsets. Polycom is still best known for its desk phones, but the company has performed a successful pivot to focus on UCaaS (unified communications as a service) backed by cloud-based analytics services, Plantronics president and CEO Joe Burton said in a Wednesday conference call with analysts to discuss the deal.

Cloud-based collaboration services from companies such as Microsoft, BlueJeans Networks, Zoom Video Communications and others are becoming more popular. Customers of those services need endpoints (headsets, phones, cameras, etc.) and have to get them from third parties—typically multiple third parties, noted Plantronics CEO Joe Burton.

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By integrating the product set of the two companies, which includes headsets, software, desk phones, audio and video conferencing systems, analytics, and services, Plantronics is positioning itself as a one-stop shop for endpoint equipment. The addition of analytics and services developed by Polycom should make the package even more attractive, he said.  

Burton was asked if Plantronics had consulted with companies like Microsoft, BlueJeans or Zoom about the acquisition, and if they had encouraged the acquisition. Burton declined to comment directly, but said Plantronics and Polycom have longstanding business relationships with those companies and some of their competitors.

“Microsoft is a large partner of both Polycom and Plantronics and we expect them to see this as a great move for them and their partners as well,” Burton said.

The $2 billion value of the deal breaks down into an estimated $690 million of net debt, an estimated $948 million in cash, and 6.352 million Plantronics shares, valued at $362 million. Polycom shareholders will end up owning approximately 16% of the combined company.

Plantronics said it intends to fund the cash portion of the consideration with cash on hand and approximately $1.375 billion in new, fully committed debt financing. Wells Fargo Bank and affiliates have committed to provide the debt financing for the transaction.

Plantronics expect $75 million in annual run-rate cost synergies within 12 months of transaction close. Burton indicated that Plantronics expects synergy-synergies, rather than layoff-synergies.

“In no way is this a consolidation play,” Burton said on the call with analysts. “We get their revenue, we get ours, and we get synergies from deeper integration.”

Polycom had been purchased by Siris Capital in 2016. The deal with Plantronics will gain two Siris partners, founder Frank Baker and executive partner Daniel Moloney, seats on Plantronics’ board of directors.

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