Ribbon to Merge with ECI Telecom
14 November, 2019
Ribbon will pay $324 million of cash and 32.5 million shares of Ribbon common stock. Its traded value at NASDAQ dropped 25%. The combined company is expected to reach annual revenues of $900 million
Photo above: ECI Telecom’s HQ in Petah Tikva, Israel
By Roni Lifshitz, Techtime
Ribbon Communications from Westford, Mass, announced that it has entered into an agreement to acquire ECI Telecom for $324 million of cash and 32.5 million shares of Ribbon common stock. ECI stockholders will also receive approximately $31 million from ECI’s sale of real estate assets. Based in Petah Tikva, Israel, ECI provides end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators.
“The ECI acquisition will extend Ribbon’s reach into the networking and the global 5G markets,” said Daryl Raiford, Chief Financial Officer of Ribbon. ECI stockholders are expected to own approximately 23 percent of the combined company on a fully diluted basis. Privately held and founded in 1961, ECI has approximately 1,700 employees. Its total revenue was $376 million and for the twelve months ended September 30, 2019.
This is a bold move for Ribbon: Today it manly a provider of software solutions that secure and power service providers and enterprise communications environments. The acquisition will bring Ribbon into the market of programmable packet and optical networking solutions. The transaction has been unanimously approved by Ribbon’s board of directors and is subject to the approval of Ribbon’s stockholders.
Ribbon anticipates the acquisition will close in the first quarter of 2020. The merger is about to create a leading edge 4,000 employees solutions provider with anticipated annual revenue of over $900 million (Combined 2018 data of Ribbon and ECI), serving customers in more than 140 countries. Hand in hand with the deal announcement, Ribbon also experiencing major change in its management. Today it announced the departure of its President and Chief Executive Officer, Franklin Hobbs, effective immediately.
The Board has appointed Steven Bruny, Executive VP for Global Sales and Services, and Kevin Riley, Executive VP and Chief Technology Officer, as Interim Co-Presidents and Chief Executive Officers. Bruny and Riley will assume Mr. Hobbs’ duties while Ribbon’s Board of Directors works with One Degree Partners, a leading global executive search firm, to recruit a new CEO for Ribbon.
It seems the stock market disapproved this move, or both: Ribbon’s common shares in NASDAQ lost approximately 25% of its price, sinking from $4.05 yesterday to $3.05 today.