Ribbon Communications to Merge with ECI Telecom Group

  • ECI Telecom
  • Ribbon Communications

WESTFORD, MA — Ribbon Communications, a global provider of software in secure and intelligent cloud communications, announced that it has entered into an agreement to acquire, through a merger, ECI Telecom Group (ECI), a global provider of end-to-end packet-optical transport and SDN/NFV solutions for service providers, enterprises, and data center operators, for 32.5 million shares of Ribbon common stock and $324 million of cash. ECI stockholders will also receive approximately $31 million from ECI's sale of real estate assets.

With this transformational transaction, Ribbon and ECI will create a powerful, leading edge solutions provider with anticipated 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.

Positioned to Serve the High-Growth 5G Market

The combined company expects to realize 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. Furthermore, 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.

"The ECI acquisition will extend Ribbon's reach into the networking market and propel us into the global 5G market," said Daryl Raiford, chief financial officer of Ribbon. "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."

Ribbon's corporate headquarters is expected to remain in Westford, Massachusetts.
 

Key Takeaways

The proposed transaction is expected to:

  • Create a larger US-based global solutions provider and strengthens the company's position in the converged telecom/datacom market.
  • Align with Ribbon's strategic direction to expand its ecosystem, penetrate new adjacent markets and position the company for sustained growth.
  • Position Ribbon to leverage its global salesforce to cross-sell ECI's products to key geographies, such as North America and Japan.
  • Enable Ribbon's entry into the rapidly growing 5G networking market with ECI's market-ready solutions.
  • Expand Ribbon's relationships with mobile service providers, enabling the company to more broadly position its big data analytics solutions with ECI's packet networking and optical transport solutions.
  • Provide the combined company's customers and partners with a broader solutions portfolio from a larger scale and trusted vendor.
  • Broaden carrier relationships in Europe and Asia and add customers in critical infrastructures, utilities, defense and homeland security sectors.
  • Expand Ribbon's core TAM from $3 billion to $39 billion1.

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