Polycom Receives Revised Offer From Second Potential Buyer

Polycom Inc., which had agreed to be bought out by Canadian telecommunications company Mitel Networks Corp., on Monday disclosed a revised offer from a second buyer that could derail the nearly $2 billion Mitel deal.

Shares of Polycom, down 17% over the past 12 months, rose 4% to $11.56 in after-hours trading.

Under the terms of the revised offer, which Polycom said may constitute a "superior" or financially more favorable proposal for Polycom shareholders, the unidentified private-equity firm presented two plans: an $11-a-share cash dividend, or the choice to trade the dividend for a new convertible preferred stock; or a "take private" deal of $11.50-a-share in cash with a contingent of up to $3 a share.

In both cases, Polycom said, the cash dividend, existing debt and the $60 million termination fee to Mitel would be paid using proceeds from the sale of preferred stock, $870 million in new debt and available cash.

Mitel countered its merger proposal was superior, saying Polycom shareholders will own 60% of the combined company.

"The deal also offers certainty of committed financing in an uncertain and volatile debt market, and attractive synergy value," Mitel said Monday afternoon in a prepared statement.

Polycom said its board still recommends the Mitel merger.

The deal is projected to close this summer.

Mitel and Polycom were initially brought together by Paul Singer's Elliott Management Corp., one of the so-called activist investors whose victories include EMC Corp.'s decision to sell itself to Dell Inc.

The New York hedge fund, which holds a 6.5% stake in Polycom and a 9.7% stake in Mitel, had said Polycom's video and group conferencing technology would fit well with Mitel's phone and mobile products and laid out a plan under which the combined company would then try to buy ShoreTel Inc., another of its investments.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

May 23, 2016 21:05 ET (01:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.