US software and cloud communications company Ribbon Communications (Nasdaq: RBBN) today announced that it has entered into an agreement to acquire, through a merger Israeli company ECI Telecom Group Ltd. Petah Tikva-based ECI provides end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators. Ribbon will pay 32.5 million shares of Ribbon common stock (about $4 per share) and $324 million of cash and ECI stockholders will also receive $31 million from ECI's sale of real estate assets - for a total of about $486 million.
Founded in 1961, ECI is a veteran communications equipment developer owned by Israeli businessman Shaul Shani. It recently failed in its attempt to hold a flotation on the London Stock Exchange.
Ribbon and ECI will have combined annual revenue of over $900 million serving customers in more than 140 countries, and 4,000 employees worldwide. Ribbon expects the combination to position the company for growth and to enhance its competitive strengths by expanding its product portfolio beyond solutions primarily supporting voice applications to include data applications and optical networking.
Ribbon says that the combined company will be well positioned to serve the high-growth 5G market. The services associated with 5G are expected to drive a substantial increase in network demand and will likely require additional investment in the networking layer, where ECI is already a leading vendor.
ECI CEO Darryl Edwards said, "We are excited to join forces with Ribbon, bringing together Ribbon's and ECI's rich portfolios of communications solutions. Both companies enjoy a distinguished operating history and are trusted suppliers to the world's leading telecommunication service providers and enterprises. We aim to create a powerhouse company that offers world-class products for an enhanced customer experience, benefiting our combined global customer base."
Ribbon CFO Daryl Raiford said, "The ECI acquisition will extend Ribbon's reach into the networking market and propel us into the global 5G market. ECI brings world class networking technology and a proven track record of success in winning top customers in direct competition with major industry players. Ribbon has long-standing, deep customer relationships in North America and Japan, which will provide immediate access to ECI solutions into these substantial markets. We believe this combination will create new revenue opportunities to drive growth, provide our customers and partners with a broader solutions portfolio, and generate significant long-term value for our stockholders."
Published by Globes [online], Israel business news - en.globes.co.il - on November 14, 2019
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