UPDATE 3-Siris Capital to buy Polycom, thwarting Elliott's Mitel merger

Fri Jul 8, 2016 10:09am EDT
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(Updates share price movement, adds Elliott statement in paragraphs 5, 8)

By Michael Flaherty and Narrotam Medhora

July 8 (Reuters) - Video conferencing equipment maker Polycom Inc said it agreed to be bought by a private equity firm for about $1.7 billion, scrapping a three-month old deal with Canada's Mitel Networks Corp.

The private equity firm, Siris Capital Group, offered $12.50 a share in cash for Polycom, representing a premium of 15 percent to Polycom's close on Thursday.

The Siris Capital deal thwarts a plan by activist hedge fund Elliott Management, which bought stakes in both Polycom and Mitel and played a leading role in getting the two to agree to a merger.

San Jose, California-based Polycom will pay Mitel a termination fee of $60 million, the company said. Siris' offer will remain in effect until July 15, the private equity firm said in a statement.

Polycom's shares jumped about 12.9 percent to $12.27 in morning trading on Friday, while Mitel shares surged 18 percent.

New York-based Elliott bought stakes in Polycom and Canada's Mitel in October, saying at the time that the two companies should merge as part of a broader need for the sector to consolidate. In April, Mitel agreed to buy Polycom for around $1.98 billion in cash and stock.

As part of that deal, Polycom stockholders would get $3.12 in cash and 1.31 Mitel shares for each of their shares, or $13.68 based on the closing price of a Mitel common share on April 13. Shares of both companies dipped in the weeks following the agreement.   Continued...