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Consolidation in the B2B CSP market with Ribbon and ECI set to merge

Two companies involved in providing communications services to other companies are merging to make a single bigger one.

Ribbon Communications focuses on cloud communications as a platform while EDI provides network solutions to companies like operators and cloud providers, so there’s a distinctly cloudy theme to this merger. Rather confusingly Ribbon says it’s acquiring ECI through a merger. Ribbon is handing over 32.5 million shares, which equates to around $130 million, as well as $324 in cash to mergaquire ECI.

“The ECI acquisition will extend Ribbon’s reach into the networking market and propel us into the global 5G market,” said Daryl Raiford, CFO 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.”

“We are excited to join forces with Ribbon, bringing together Ribbon’s and ECI’s rich portfolios of communications solutions,” said Darryl Edwards, CEO of ECI. 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.”

“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 (couldn’t they have found a Darrell?) Frey, Analyst at Ovum. “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 market doesn’t seem to have such a rosy view of this move, however, with Ribbon’s shares down a whopping 20% at time of writing. Maybe it has something to do with Ribbon CEO Franklin Hobbs bailing on the day of the announcement. Presumably he didn’t think this was such a great idea either, so you can see why investors might be feeling a bit twitchy. They could also have tire of Ribbon’s apparent addiction to M&A in general

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