Mitel (MITL) and Polycom (PLCM) announced that they have entered into a definitive merger agreement in which Mitel will acquire all of the outstanding shares of Polycom common stock in a cash and stock transaction valued at approximately $1.96B. Under the terms of the agreement, Polycom stockholders will be entitled to $3.12 in cash and 1.31 Mitel common shares for each share of Polycom common stock, or $13.68 based on the closing price of a Mitel common share on April 13, 2016.

The transaction represented a 22% premium to Polycom shareholders based on Mitel's and Polycom's "unaffected" share prices as of April 5, 2016 and is expected to close in the third quarter of 2016, subject to shareholder and regulatory approvals and other customary closing conditions.

The company said the combined company will have a significantly larger financial platform with the scope, scale and operating leverage needed to strategically expand in an actively evolving market. Financial highlights of the transaction include: Diverse revenue base with pro forma 2015 sales of approximately $2.5 billion; Strong cash flow generation with pro forma 2015 EBITDA of approximately $350 million; Strengthened balance sheet with Mitel's pro forma 2015 net debt leverage reduced from 3.8x to 2.1x; Expected to be accretive to Mitel shareholders in 2017; Anticipated operating synergies of approximately $160 million by 2018, driven by supply chain optimization, facilities consolidation and economies of scale. Each of Mitel's and Polycom's boards have unanimously approved the transaction and are resolved to recommend that its shareholders vote in favor of the transaction.

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