Additionally announces $500 million share
repurchase authorization and $250 million debt paydown
- Avaya to expand its portfolio with a new “Avaya Cloud Office by
RingCentral” UCaaS offering
- RingCentral becomes exclusive provider of UCaaS solutions to
Avaya
- Avaya will now have a full suite of public, private and hybrid
cloud solutions for its global UC and CC customers and
partners
- Accelerates the company’s execution of its growth strategy and
transformation to the cloud
- RingCentral contributes $500 million, comprised of a $125
million preferred equity investment and an advance of $375 million
for future payments and certain licensing rights
- Avaya delivers additional value to its shareholders through
capital allocation actions
Avaya Holdings Corp. (NYSE: AVYA), a global leader in solutions
to enhance and simplify communications and collaboration, announced
a strategic partnership with RingCentral, Inc. (NYSE: RNG), a
leading provider of global enterprise cloud communications,
collaboration and contact center solutions. Through this exclusive
partnership, Avaya will introduce Avaya Cloud Office by RingCentral
(“Avaya Cloud Office” or “ACO”), a new global unified
communications as a service (UCaaS) solution.
Avaya Cloud Office expands the company’s industry-leading
portfolio to offer a full suite of UC, CC, UCaaS and CCaaS
solutions to a global customer base, which includes more than
120,000 customers, over 100 million UC lines and 5 million CC users
in over 180 countries.
“Avaya and RingCentral’s joint investment and commitment to
bringing Avaya Cloud Office to market creates an unprecedented
opportunity to accelerate the transition to the cloud with
attractive economics for our customers and partners,” said Jim
Chirico, President and CEO of Avaya. “This also gives us the
opportunity to unlock value from a largely unmonetized base of our
business as it brings compelling value to our customers and
partners. We believe this highly complementary partnership is a
game changer that expands the total addressable market for Avaya
and creates meaningful value for both Avaya and RingCentral.”
ACO combines RingCentral’s leading UCaaS platform with Avaya
technology, services and migration capabilities to create a highly
differentiated UCaaS offering. Avaya expects to launch ACO in the
first quarter of calendar 2020.
“This strategic partnership leverages the respective strengths
of Avaya and RingCentral to provide a definitive differentiated
solution,” said Vlad Shmunis, Founder, Chairman and CEO of
RingCentral. “We are excited to bring RingCentral’s leading UCaaS
platform to Avaya’s installed base of over 100 million users and
over 4,700 partners, providing long-term growth opportunities for
both our companies.”
Chirico added, “The strategic actions that we are executing as a
result of our comprehensive review create new growth opportunities,
return capital to our shareholders and de-lever our balance sheet.
With a clear path forward, we will further invest in technology and
innovation to continue bringing state-of-the-art solutions to our
valued customers and partners.”
Capital Allocation Priorities
Avaya’s Board of Directors has authorized a share repurchase
program under which it may purchase up to $500 million of Avaya’s
common stock. Avaya also announced plans to pay down $250 million
of the principal debt under its Term Loan B.
Transaction Terms
RingCentral is contributing $500 million to its partnership with
Avaya, including a $125 million investment of 3% redeemable
preferred equity that is convertible at $16 per share, representing
an approximate 6% position in Avaya on as-converted basis.
RingCentral will also pay Avaya an advance of $375 million
primarily in stock for future payments and certain licensing
rights.
Timing and Approvals
The transaction is expected to close in the fourth quarter of
calendar 2019, subject to customary closing conditions and
regulatory approvals. The transaction does not require the approval
of the shareholders of Avaya or RingCentral. The Boards of
Directors of both companies have unanimously approved the
transaction.
Advisors
J.P. Morgan is acting as exclusive financial advisor, and
Kirkland & Ellis LLP is acting as legal advisor to Avaya.
Conference Call
Avaya will host a live webcast and conference call to discuss
this announcement at 5:00 p.m. Eastern Time on Thursday, October 3,
2019. To access the live conference call by phone, listeners should
dial +1-833-224-0545 in the U.S. or Canada and +1-647-689-4064 for
international callers. To join the live webcast, listeners should
access the investor page of Avaya's website at
https://investors.avaya.com. Following the live webcast, a replay
will be available on the investor page of Avaya's website for a
period of one year. A replay of the conference call will be
available for one week soon after the call by phone by dialing
+1-800-585-8367 in the U.S. or Canada and +1-416-621-4642 for
international callers, using the conference access code:
4979904.
About Avaya
Businesses are built on the experiences they provide, and every
day millions of those experiences are built by Avaya (NYSE: AVYA).
For over one hundred years, we’ve enabled organizations around the
globe to win - by creating intelligent communications experiences
for customers and employees. Avaya builds open, converged and
innovative solutions to enhance and simplify communications and
collaboration - in the cloud, on-premise or a hybrid of both. To
grow your business, we’re committed to innovation, partnership, and
a relentless focus on what’s next. We’re the technology company you
trust to help you deliver Experiences that Matter. Visit us at
www.avaya.com.
Cautionary note regarding forward-looking statements
This document contains “forward-looking statements.” All
statements other than statements of historical fact are
“forward-looking” statements for purposes of the U.S. federal and
state securities laws. These statements may be identified by the
use of forward looking terminology such as “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,”
“might,” “our vision,” “plan,” “potential,” “preliminary,”
“predict,” “should,” “will,” or “would” or the negative thereof or
other variations thereof or comparable terminology. The Company has
based these forward-looking statements on its current expectations,
assumptions, estimates and projections. While the Company believes
these expectations, assumptions, estimates and projections are
reasonable, such forward-looking statements are only predictions
and involve known and unknown risks and uncertainties, many of
which are beyond its control. Risks and uncertainties that may
cause these forward-looking statements to be inaccurate include,
among others: the announcement of the strategic partnership; the
failure to obtain necessary regulatory approvals; adverse effects
on the market price of Avaya’s stock or Avaya’s operating results
as a result of the failure to consummate the strategic partnership
or any failure or delay in the development of related products or
services; and other risks discussed in the Company’s Annual Report
on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed
with the Securities and Exchange Commission (the “SEC”). These
risks and uncertainties may cause the Company’s actual results,
performance or achievements to differ materially from any future
results, performance or achievements expressed or implied by these
forward-looking statements. For a further list and description of
such risks and uncertainties, please refer to the Company’s filings
with the SEC that are available at PP. The Company cautions you
that the list of important factors included in the Company’s SEC
filings may not contain all of the material factors that are
important to you. In addition, in light of these risks and
uncertainties, the matters referred to in the forward-looking
statements contained in this report may not in fact occur. The
Company undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or otherwise, except as otherwise required by law.
Use of Non-GAAP Projections
This presentation includes certain projections of non-GAAP
financial measures. Due to the high variability and difficulty in
making accurate forecasts and projections of some of the
information excluded from these projected measures, together with
some of the excluded information not being ascertainable or
accessible, the Company is unable to quantify certain amounts that
would be required to be included in the most directly comparable
GAAP financial measures without unreasonable efforts. Consequently,
no disclosure of estimated comparable GAAP measures is included and
no reconciliation of the forward-looking non-GAAP financial
measures is included.
Source: Avaya Newsroom
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191003005817/en/
Avaya Media Inquiries: Forrest Monroy 669-242-8122
fwmonroy@avaya.com
Avaya Investor Inquiries: Michael McCarthy
919-425-8330 mikemccarthy@avaya.com
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