Ribbon Communications Inc. to Merge with ECI Telecom Group Ltd
With this transformational transaction, Ribbon and ECI will create a powerful, leading edge solutions provider with anticipated combined annual revenue of over
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
"The ECI acquisition will extend Ribbon's reach into the networking market and propel us into the global 5G market," 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," said
"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
Under the terms of the merger agreement, Ribbon will acquire all outstanding equity of ECI. Ribbon will issue 32.5 million shares of its common stock to ECI stockholders and provide
Overview of ECI
- Privately held and founded in 1961, ECI has approximately 1,700 employees and is headquartered in
Petah Tikva, Israel.
- Serves over 300 global customers with over 100 new customer wins in the last three years.
- ECI's Total Addressable Market ("TAM") is expected to reach
$36 billionby 20222.
- ECI's total revenue was
$376 millionand Adjusted EBITDA was $23 millionfor the twelve months ended September 30, 20193.
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 Americaand 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
Europeand Asiaand add customers in critical infrastructures, utilities, defense and homeland security sectors.
- Expand Ribbon's core TAM from
$3 billion to $39 billion1.
1 Combined 2018 data of Ribbon and ECI.
2 TAM market share projections from various sources:
3 ECI's Adjusted EBITDA is obtained from ECI's financial statements as conformed to US GAAP and Ribbon's accounting practices.
ECI is a global provider of ELASTIC network solutions to service providers, critical industries and data center operators. With the advent of 5G, IoT and smart everything, traffic demands are increasing dramatically, and network operators must make smart choices as they evolve their infrastructure. ECI's Elastic Services Platform leverages its programmable packet and optical networking solutions, along with its service-driven software suite and virtualization capabilities, to provide a robust yet flexible solution for any application. ECI solutions are tailored for the needs of today, yet flexible enough to meet the challenges of tomorrow. For more information, visit ECI at ecitele.com.
Important Additional Information Will be Filed with the
Ribbon Communications Inc. ("Ribbon") will file with the
Participants in the Solicitation
Ribbon and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Ribbon in respect of the proposed transactions contemplated by the proxy statement. Information regarding the persons who are, under the rules of the
No Offer or Solicitation
This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
This communication contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning Ribbon and ECI, the proposed transactions and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of Ribbon and ECI as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "seek," "see," "plan," "could," "would," "should," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project," "target" or similar words, phrases or expressions, and include statements regarding the anticipated benefits of the merger with ECI, expected funding for the merger, anticipated timing of closing of the merger, expected proceeds from the sale of ECI's real estate assets, and Ribbon's and ECI's total addressable markets. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the parties' control, such as statements about the consummation of the proposed transaction. Therefore, you should not place undue reliance on such statements.
Factors that could cause actual results to differ materially from those in the forward-looking statements include failure to consummate the proposed transaction; failure to make or take any filing or other action required to consummate the proposed transaction in a timely matter or at all; failure to obtain applicable regulatory or shareholder approvals in a timely manner or otherwise; failure to satisfy other closing conditions to the proposed transactions; risks that the new businesses will not be integrated successfully or that the combined companies will not realize estimated cost savings; failure to realize anticipated benefits of the combined operations; potential litigation relating to the proposed transaction and disruptions from the proposed transaction that could harm Ribbon's or ECI's business; reductions in client spending, a slowdown in client payments and changes in client requirements; ability to hire and retain key personnel; the potential impact of announcement or consummation of the proposed transaction on relationships with third parties, including clients, employees and competitors; ability to attract new clients and retain existing clients in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the companies; international, national or local economic, social or political conditions that could adversely affect the companies or their clients; conditions in the credit markets; risks associated with assumptions the parties make in connection with the parties' critical accounting estimates and legal proceedings; and the parties' international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Accordingly, there is no assurance that the expectations of Ribbon or ECI will be realized. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Ribbon's or ECI's consolidated financial condition, results of operations or liquidity. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties' businesses, including those described in Ribbon's Annual Report on Form 10-K/A, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed from time to time with the SEC. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of any changes in circumstances or new information, future events or otherwise, except to the extent required by securities and other applicable law.
Conference Call Details
Ribbon will offer a live, listen-only webcast of the conference call to discuss its planned acquisition of
Conference Call Details:
Dial-in number (Domestic): 877-407-2991
Dial-in number (Intl): 201-389-0925
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