May 23, 2016 / 11:47 PM / 2 years ago

UPDATE 1-Polycom to discuss PE offer in challenge to Mitel

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May 23 (Reuters) - Video conferencing equipment maker Polycom Inc said on Monday it received a revised proposal from a private equity firm that could be “superior” to Mitel Networks Corp’s offer.

Polycom’s shares rose 4.2 percent to $11.56 in after-market trading.

Polycom, which agreed to be bought by Canada’s Mitel for about $1.96 billion in April, said it intends to engage in discussions with the private equity firm, identified as Sponsor 1.

Under the revised proposal, Polycom stockholders would receive a cash dividend of $11 per share and the private equity firm would purchase $650 million in shares of a new convertible preferred stock of Polycom.

After the proposed deal, Sponsor 1 would own 56 percent of Polycom’s outstanding equity on an as-converted basis.

Under Mitel’s offer, Polycom stockholders will get $3.12 in cash and 1.31 Mitel shares for each of their shares.

Hedge fund Elliott Management, which holds a 6.6 percent stake in Polycom and a 9.7 percent stake in Mitel, has been pushing the companies to merge since October.

Mitel said in a statement on Monday that its acquisition offers superior and greater upside to Polycom.

Sponsor 1, which has been in merger talks with Polycom since 2015, sent Polycom a revised proposal in May. (Reporting by Kshitiz Goliya in Bengaluru; Editing by Maju Samuel)

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