Sonus has a SIP of Kandy with Genband merger

The merger of IP comms players Sonus and Genband has been announced, with the aim of creating a network transformation leader.

Sonus is best known for its cloud-based session initiation protocol (SIP) and VoLTE products, while Genband is known for its Kandy cloud-communications-platform-as-a-service offering. Both have strengths in software-based ‘real-time’ communications, a somewhat redundant descriptor as that covers the vast majority of all comms.

“Together, Sonus and Genband create a market leader in real-time communications with enhanced capabilities to support our customers’ move to cloud-based solutions,” said Raymond Dolan, President and CEO of Sonus, who will also be the CEO of the combined company. “This is a strategically and financially compelling transaction for Sonus and we are confident that together with Genband we will achieve our growth initiatives faster and more fully than either company could do on its own.”

“We are delighted to combine with Sonus at a time when the world’s largest service providers and enterprises accelerate the modernization and transformation of their networks,” said David Walsh, CEO and Chairman of Genband, who will only head-up the Kandy bit of the new company. “With this combination, we believe our complementary product portfolios and expanded global footprint will allow us to even better respond to the evolving needs of customers.”

M&A canned quotes tend to be of the most generic kind, usually reflecting on what a great move it is and reassuring shareholders it’s in their best interests. The very least you expect of them is the belief that the new company will be greater than the sum of its parts, otherwise what’s the point.

While this is being positioned as a merger of equals, both the CEO and the Chairman (Richard Lynch, current Chairman of Sonus and former CTO of Verizon) will come from Sonus. Furthermore the total enterprise value of the move is $745 million and Sonus has a market cap of $410 million, implying it is contributing the majority of that value. Regardless the equity owners of privately-held Genband will get have of the stock in the new company, so maybe that’s why Sonus got the top jobs.

Light Reading revealed the two companies were in talks over a year ago, so maybe they spent the intervening time arguing about who should be the boss. Sonus shares were up 6% at time of writing and, while the combined company has yet to announce its name, you’d get short odds on ‘Sonus’. Whatever they choose we sincerely hope they don’t capitalise all the letters, because that’s just annoying.

One comment

  1. Avatar OldTelco 24/05/2017 @ 2:14 am

    Another example of financial engineering. Both companies have lost money for 20+ years. Both have declining revenues. So, let’s put them together and cut products, cut the workforce, and it will all be magically better. By the way, 5 board seats to GB and 4 to Sonus means that a shuffling at the top is more than likely in 2018 once everyone realizes the math didn’t work.
    -1 + -1 does not equal 3.

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