Plantronics Completes USD 2 Billion Polycom Acquisition

Soon after publicly-traded Plantronics completed its $2 billion acquisition of San Jose-based privately-held Polycom, Plantronics CEO Joe Burton posted on LinkedIn about his ambition to “create a world where experiences are tailored for people and enabled by technology that ‘just works.’”

Next, a one-minute video was posted on Twitter, featuring Don Williams, Tarun Loomba and Amy Barzdukas,formerly top executives at Polycom now at Plantronics, along with Phil Sherburne, Mary Huser and Burton of Plantronics, talking about why the two communications companies are better together to find communications solutions.

The London Polycom team dressed in Plantronics orange T-shirts for a photo on Twitter, and tweets from Germany, Turkey and Italy followed — not surprising given that Polycom, known for voice and video conferencing, has 2,800 employees in 59 offices around the world.

Plantronics, known for its headsets, has more employees, 3,800 at 33 locations, including 529 at its headquarters in Santa Cruz’s Harvey West neighborhood.

To buy Polycom from Triangle Private Holdings II LLC, Plantronics took out a $1.275 billion loan from Well Fargo that is due in full in July 2025, according to terms of the agreement.

Plantronics’ Monday announcement projected savings of $75 million in 12 months but it’s not clear exactly where savings can be found. Usually acquisitions are followed by layoffs to eliminate duplication of services and staff.

REDUNDANCIES

George Gutierrez, Plantronics, senior director of global communications and content strategy, provided a statement saying, “As planned, with small exceptions, we have now merged the Polycom and Plantronics workforces and will now work together to understand the needs of the combined businesses over time.”

He added, “Our Santa Cruz location will continue to serve as the global center-of-excellence for our headset business and a showcase facility for our ‘Smarter Working’ philosophy and ‘Soundscaping.’ Santa Cruz is at the core of our values and our philosophy.”

Analysts Alan Greenberg and Andrew Nilssen of Wainhouse Research blogged about Plantronics’ planned acquisition in March when the deal was unveiled, seeing “redundancies in sales and channel management, finance and administration, manufacturing and distribution” plus “product engineering/R&D.”

As Greenberg and Nilssen put it, Plantronics “is on the upswing” with revenue growing — from $762 million in 2013 to $881 million in 2017 — while at Polycom, private since September 2016, revenues “have seemed to be flat to in slight decline” with $1 billion in revenue for 2017.

Describing the deal as David buys Goliath, Greenberg and Nilssen wrote, “We think of this as two complementary firms, one tall, one short, with complementary skills: one good with a slingshot, one good with a club. Now David and Goliath are better positioned against the likes of Cisco, Huawei, ZTE, Kedacom and … potentially Logitech.”

Analysts at Frost & Sullivan, a global business consulting firm based in Santa Clara, offered these perspectives.

Alaa Saayed called two portfolios “highly complementary” with the acquisition “likely to deliver benefits to both vendors as well as their customers… the new entity can leverage its combined strengths to accelerate growth and gain market share.”

Michael Brandenburg was a bit more skeptical, tweeting, “Looking forward to seeing if @Plantronics and @Polycom can deliver on their #BetterTogether promise.”

Plantronics posted two job openings at Santa Cruz Tech Beat this month, after posting 12 jobs in June and 20 in May.

NEW DIRECTORS

Frank Baker and Daniel Moloney, executives with Siris Capital, an affiliate of Triangle Private Holdings II, have been appointed to the Plantronics’ board.

As of April 1, Robert Hagerty, former Polycom CEO, moved up from Plantronics’ board member to become Plantronics chairman. He announced the April 17 departure of board member Maria Martinez, newly named Cisco executive vice president and chief customer experience officer, and new board member Guido Jouret, who has experience incubating new businesses at Cisco, Envision and Nokia.

Under the agreement with Polycom, the Plantronics board, which had been limited to five to nine members, can be six to 11 members.

Plantronics will release financial results for its fiscal Q1 2019 on Aug. 7. Since this acquisition closed after that quarter ended, the company plans to issue guidance for the September quarter on a combined basis.

In January, Polycom announced plans to acquire Obihai Technologies, which develops hardware and software for voice-over-the-internet phone, and close the deal by the end of the first quarter. The purchase price was not disclosed. – Santa Cruz Sentinel