The US Federal Trade Commission (FTC) has effectively approved Mitel’s $1.96 billion bid for UC systems vendor Polycom, by striking out the normal waiting period mandated by antitrust regulations.
The merger of the two billion-dollar unified communications and collaboration (UC&C) vendors is intended to create a broader UC&C presence that can take on the longstanding behemoths of the sector, such as Microsoft and Cisco – both of which have refocused their own businesses on cloud services and collaboration.
The April deal was spurred by activist investor Elliott Management last autumn, and still awaits shareholder approval. The two companies aim to complete in Q3 2016.
Although the formation of the new company has been generally well received, and the Polycom brand will remain for the foreseeable future, UCInsight believes that while the ‘bigger equals better’ approach may create a larger, more generalised platform, have short-term benefits for investors, and increase buying power, it betrays 20th Century IT industry thinking in a market that is all about 21st Century agility and clarity of focus. Mitel and Polycom don’t have nearly as much common ground as investors apparently believe.
As the enterprise formerly known as Hewlett-Packard found, the creation of a big, general ‘do it all’ corporation is not always the answer in a market that increasingly values precision and a clear set of values, which is why HP recently split into two separate companies, each with a more defined purpose, after years of ‘building big’. This week, one of those companies, Hewlett Packard Enterprise announced that it was itself splitting into two, spinning off its IT services division and merging it with the services wing of yet another recently divided company, CSC. Focus, agility,’ and clarity are of rising importance in this sector, as more than one industry behemoth is discovering.
The Mitel/Polycom deal also promises to create operating efficiencies and savings, but the history of large-scale mergers has not always been so straightforward, as corporate cultures, systems, and management are brought together and asked to slug it out and hope that clarity, efficiency, and focus will somehow appear. Again, just ask HP.
The deal demands strong strategic and operational management to succeed, and to create the singular market presence that both investors and customers demand.