Telecom equipment and software provider Ribbon Communications Inc., has entered into an agreement to acquire, through a merger, ECI Telecom Group Ltd . (“ECI”), a provider of end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators. Ribbon will pay $324 million in cash and 32.5 million shares of Ribbon common stock. As part of the deal, ECI plans to sell approximately $31 million of real estate assets, distributing the proceeds to shareholders.
Ribbon is the former GenBand, providing key switching, media gateways, and session border controllers, among other platforms.
“With ECI’s solid position and long history in the packet-optical transport markets, this acquisition makes sense for Ribbon on multiple fronts, giving Ribbon an entry into the early and growing 5G xHaul transport market while providing its combined customers with a full stack of solutions,” said Don Frey, Ovum principal analyst, transport and routing, in a prepared statement. “In addition to cross-selling opportunities, this proposed acquisition will give Ribbon a broad product line and enhance scale as a communications solutions vendor to service providers and enterprises.”
The combined companies are expected to have annualized combined revenue of more than $900 million, serving customers in more than 140 countries, with 4,000 employees worldwide.
The combined company expects to enjoy revenue synergies from the expansion of Ribbon’s addressable markets and sales of ECI’s products in Ribbon’s markets, with an emphasis on North America and Japan.
“The ECI acquisition will extend Ribbon’s reach into the networking market and propel us into the global 5G market,” said Daryl Raiford, Ribbon chief financial officer, in a prepared statement. “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.”