Mitel Gets U.S. Regulatory OK to Buy Polycom
The Federal Trade Commission eliminates a waiting period that is part of the country's antitrust laws, paving the way for the two vendors to merge.Mitel's $1.96 billion bid for video conferencing vendor Polycom has received the approval of regulators in the United States, with the Federal Trade Commission deciding to terminate the waiting period under an antitrust act. The early termination of the waiting period in the Hart-Scott-Rodino Antitrust Improvements Act removed an obstacle to the proposed merger, which Mitel officials said will create a larger and more complete communications technology vendor that can better compete with such market leaders as Cisco Systems and Microsoft. There are still a number of other hurdles that have to be cleared before the deal can close, including shareholder OKs and other regulatory approvals, according to Mitel officials. They hope to close the acquisition in the third quarter. When Mitel and Polycom executives announced the deal in April, there had been months of reports leading up to that point that the two companies would eventually merge. The idea first came to light in October 2015, when officials with activist investor Elliott Management announced they had significantly grown Elliott's stake in both companies. Almost immediately, officials with the hedge fund began pushing the idea of merging Mitel with Polycom with the goal of creating a larger player in the quickly evolving unified communications (UC) and collaboration space. Elliott also wanted to increase the shareholder value of both companies.
"The combined business will have far greater scale than either company alone, the ability to deliver a full array of products to customers, and the means to invest behind product areas that will provide stability and growth for the future," Jesse Cohn, senior portfolio manager at Elliott and a driver of the hedge fund's growing activity in the tech industry, said in a statement after the deal was announced in April. "Financially, the combination will create a company with a strong balance sheet, meaningful synergies, and enormous cash flow generation that can be used to engage in value-generative M&A."