HONG KONG, CHINA - Media OutReach - July 4, 2018 - Plantronics (NYSE: PLT) announced today that it has
completed its acquisition of Polycom. The acquisition of Polycom will
accelerate and expand Plantronics' vision and enable it to deliver the broadest
portfolio of end points in the Unified Communications and Collaboration (UCC)
ecosystem.
"We are pleased that Plantronics and
Polycom are moving ahead as one company focused on putting people at the center
of every collaboration experience," stated Joe Burton,
Plantronics' President and Chief Executive Officer. "Plantronics now offers
an unparalleled portfolio of integrated, intelligent solutions that spans
headsets, software, desk phones, audio and video conferencing, and cloud services.
This combined offering empowers people with the tools and flexibility they need
to create the best experience when connecting to what is most important to
them."
UCC and team collaboration technology are unlocking human potential at
work and at home. With this acquisition, Plantronics is focused on voice, video,
content, and cloud solutions for every place that technology touches people as
they work, share, collaborate, and play. As trends in enterprise communications
move toward open work spaces and flexible work arrangements, the ecosystem of
platforms and devices continues to expand. With the addition of Polycom's
leading portfolio, Plantronics can offer a premium experience regardless of the
UCC solutions selected by the customer.
"The combination
of Plantronics and Polycom comes at a critical time when customers are
searching for high-quality audio and video solutions that are easy to buy, easy
to use, and easy to manage," said Ira M. Weinstein, Founder, Recon Research.
"The company's offerings work with on-premises, cloud (service provider) and
hybrid platforms, giving customers the flexibility to choose their deployment
method and cloud migration timing. In addition, its global channel and
technology partner ecosystem fosters both innovation and global reach. We're
expecting great things in the future from the new and expanded Plantronics."
Plantronics expects the acquisition to be immediately accretive to
Non-GAAP earnings per share and believes it can achieve annual run-rate cost
synergies of $75 million within 12 months. Non-GAAP earnings per share may exclude
charges related to stock-based compensation, purchase accounting adjustments,
acquisition and integration costs, restructuring and other related charges,
litigation settlements, as well as the tax impact of these items and any discrete
tax adjustments.
Under terms of the acquisition agreement, Plantronics acquired Polycom at
a $2.0 billion enterprise value with the total consideration consisting of
approximately $1.638 billion in cash and 6.352 million Plantronics shares,
resulting in Triangle Private Holdings II, LLC, which was Polycom's sole
shareholder, owning approximately 16.0% of Plantronics following the
acquisition. Under the terms of the transaction, Frank Baker, Co-Founder and
Managing Partner, Siris Capital Group (an affiliate of Triangle Private
Holdings II, LLC), and Daniel Moloney, Executive Partner, Siris Capital Group, were
appointed to Plantronics Board of Directors and have been nominated for
election by Plantronics' stockholders at the 2018 Annual Meeting of
Stockholders.
In
conjunction with the closing of the acquisition, Plantronics today completed
the financing of the transaction through a $1.275 billion term loan priced at LIBOR
plus 250 bps, maturing in July 2025 ("Term Loan"). Proceeds of the Term Loan,
along with cash on hand, were used to finance the acquisition as well as pay related
fees and expenses. Additionally, Plantronics concurrently replaced its existing
$100 million credit facility with Wells Fargo Bank, N.A. ("Wells Fargo"), with
a new $100 million credit facility. Wells Fargo led the new Term Loan facility,
as well as the replacement of the existing credit facility and will act as
administrative agent for both the Term Loan and new credit facility. Foley & Lardner LLP acted as outside legal counsel for Plantronics.
Further details regarding the terms of the Term
Loan and new credit facility are outlined in Plantronics' Current Report on
Form 8-K to be filed today with the Securities and Exchange Commission.
Q1 Fiscal Year 2019 Earnings Release Date
Plantronics will
release financial results for its fiscal Q1 2019 on August 7, 2018. Given that
the acquisition closed after the quarter ended, Plantronics will issue
financial results on a standalone basis for the quarter, but intends to issue guidance
for the September quarter on a combined basis.
Forward Looking Statements
This press release, together with other statements and information
publicly disseminated by Plantronics, contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended , including
statements relating to: (i) potential accretion from the transaction; (ii)
expected synergies; (iii) benefits to our business, partners and users that we
expect from the acquisition; (iv) expectations regarding timing; and (v)
expectations and targets regarding cash flow and debt repayments, in addition
to other matters discussed in this press release that are not purely historical
data. We do not assume any obligation to update or revise any such
forward-looking statements, whether as the result of new developments or
otherwise.
Forward-looking statements involve risks and uncertainties that
may cause actual results to differ materially from those contemplated by such
statements. Among the factors that could cause actual results to differ
materially from those contemplated are:
|
|
|
*
|
the ability to: (i) realize expected
synergies or operating efficiencies within the expected time-frames or not at
all and (ii) integrate Polycom's business in a timely and cost-efficient
manner without adversely impacting operations, including new product
launches;
|
|
|
|
*
|
the effect of the acquisition on (i)
relationships with the combined company's historical customers, suppliers and
strategic partners and their operating results and businesses generally
(including the diversion of management time on integration-related issues),
(ii) competition and competitive strategies, including each party's
historical competitors, and (iii) the combined company's ability to retain
and hire key personnel;
|
|
|
|
*
|
the possibility that pending and
unforeseen Polycom legal and regulatory enforcement may adversely impact the
results of the combined company in amounts exceeding or otherwise not within
the scope of Plantronics indemnification rights under the acquisition
agreement;
|
|
|
|
*
|
the risks associated with the
increased leverage undertaken by the company as a result of the acquisition;
|
|
|
|
*
|
the potential negative effects of the
acquisition on the market price of the company's common stock, particularly
in light of the issuance of stock in the transaction;
|
|
|
|
*
|
risks relating to our financial
reporting including those resulting from the adoption of new accounting
pronouncements and associated system implementation in the context of the acquisition,
our ability to forecast financial results of the combined company and the
risk that reporting system integration could impact our ability to make
timely and accurate SEC filings;
|
|
|
|
*
|
the potential impact of the acquisition
on our future tax rate and payments based on the consolidation of the global
group and our ability to quickly integrate foreign operations;
|
|
|
|
*
|
the challenges of integrating the
supply chains of the two companies;
|
| |
* | the potential that our due diligence
did not uncover risks and potential liabilities associated with Polycom; |
|
|
|
*
|
our ability to realize and achieve
positive financial results projected to arise in the Enterprise market from
UCC adoption could be adversely affected by a variety of factors including
the following: (i) as UCC become more widely adopted, the risk that competitors
will offer solutions that will effectively commoditize our product and
service offerings which, in turn, will reduce the sales prices for our products
and services; (ii) our plans are dependent upon adoption of our UCC solutions
by major platform providers and strategic partners such as Microsoft
Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and Huawei,
and our influence over such providers with respect to the functionality of
their platforms or their product offerings, their rate of deployment, and
their willingness to integrate their platforms and product offerings with our
solutions is limited; (iii) delays or limitations on our ability to timely
introduce solutions that are cost effective, feature-rich, stable, and
attractive to our customers within forecasted development budgets; (iv) our
successful implementation and execution of new and different processes
involving the design, development, and manufacturing of complex electronic
systems composed of hardware, firmware, and software that works seamlessly
and continuously in a wide variety of environments and with multiple devices;
(v) failure of UCC solutions generally, or our solutions in particular, to be
adopted with the breadth and speed we anticipate; (vi) our sales model and expertise
must successfully evolve to support complex integration of hardware and
software with UCC infrastructure consistent with changing customer purchasing
expectations; (vii) as UCC becomes more widely adopted we anticipate that
competition for market share will increase, particularly given that some
competitors may have superior technical and economic resources; (viii) sales cycles for more complex UCC
deployments are longer as compared to our traditional Enterprise products;
(ix) our inability to timely and cost-effectively adapt to changing business
requirements may impact our profitability in this market and our overall
margins; and (x) our failure to expand our technical support capabilities to
support the complex and proprietary platforms in which our UCC products are
and will be integrated;
|
|
|
|
*
|
volatility in prices from our
suppliers, including our manufacturers located in China, which have in the
past and could in the future negatively affect our profitability and/or
market share;
|
|
|
|
*
|
fluctuations in foreign exchange
rates;
|
|
|
|
*
|
the bankruptcy or financial weakness
of distributors or key customers, or the bankruptcy of or reduction in
capacity of our key suppliers;
|
|
|
|
*
|
seasonality in one or more of our
product categories;
|
|
|
|
*
|
general global macroeconomic and
geo-political conditions, including but not limited to, fluctuations in the
stock markets generally; and
|
|
|
|
*
|
slowdowns or downturns in economic conditions
generally and in the market for consumer electronics, including voice, video
and content solutions.
|
|
|
|
For more information
concerning these and other possible risks, please refer to our Annual Report on
Form 10-K filed with the Securities and Exchange Commission on May 9,
2018 and other filings with the Securities and Exchange Commission, as
well as recent press releases. The Securities and Exchange Commission filings
can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.
About Plantronics
Plantronics is an audio pioneer and a leader in the communications
industry. Plantronics technology creates rich, natural,
people-first audio and collaboration experiences so good ideas can be shared
and heard--wherever, whenever and however they happen. The company's portfolio
of integrated communications and collaboration solutions spans headsets,
software, desk phones, audio and video conferencing, analytics and services. Our solutions are
used worldwide by consumers and businesses alike and are the leading choice for
every kind of workspace. For
more information visit plantronics.com.
Plantronics is a registered trademark of Plantronics.
The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG,
Inc. and are used by Plantronics under license. All other trademarks are the
property of their respective owners.
