The news of a bid from UC and telecommunications giant Mitel to acquire Avaya sent ripples through the greater collaboration industry this month. Bloomberg reported that if the deal goes through and the two long-time competitors consolidate their assets, the resulting vendor would be valued at more than $5 billion. Mitel reportedly has plans to invest roughly $150 million into a plan to fund share buybacks of the publicly-traded company.
This news comes as no great surprise for the sprawling, but recently troubled Avaya, who in 2017 faced a dramatic restructuring period after emerging from Chapter 11 bankruptcy. Any deal from Mitel or another buyer would have to take into consideration Avaya’s considerable debt load.
Reuters reports that Avaya is also considering an all-cash offer from the private equity firm Clayton Dubilier & Rice as an alternative to Mitel’s proposal.
What would an acquisition mean for the other major UC players?
News editor Edward Gately of Channel Partners explains how a stronger Mitel would pose direct competition to powerhouses of the UC industry, like Microsoft and Cisco, allowing it to compete as a Tier 1 telecommunications provider.
While a stronger Mitel would face several challenges in its new role as a top competitor in the space, 451 Research’s Raul Castanon elaborated on the opportunity:
“A merger between Mitel and Avaya would result in a company with a market share that would rival key industry players Cisco and Microsoft,” he said. “Furthermore, both companies come to the table with valuable assets. All of this would place the combined company in a strong position and would have a significant impact for the industry.”
Tougher competition, better products
As big UC providers trend from on-premise solutions to the Cloud and face stiffer competition, more mergers and acquisitions are likely to occur. Cisco, for example, has been on its own recent shopping spree after acquiring five new assets since the start of 2019. In August alone, the company has acquired CloudCherry and Voicea to bolster the offerings of its WebEx family.
Originally published at https://nextplane.net on September 3, 2019.