The merger of Sonus Networks and Genband creates a new force in next generation communications networking with increased scale and market reach across products, customers and geographies. The joint entity has an enterprise value of circa $745m with Sonus and Genband shareholders each own approximately 50% of the combined company.
The transaction brings together Sonus' expertise in real-time communication virtualisation, cloud-based SIP and 4G/voice-over LTE solutions and security initiatives, with Genband's UC, mobility and embedded communications solutions.
The two companies' combined 2016 revenue and EBITDA would have been approximately $680 million and $50 million, respectively, on a combined basis which excludes synergies and is prior to any impact from purchase accounting.
The combined company is expected to realise annual cost synergies of $40 million to $50 million by the end of 2018 and to drive solid cash flow from operations in the first year after closing.
Following the full impact of expected annualized synergies, the combined company is expected to generate at least $100 million in annual EBITDA, with fiscal year 2020 EBITDA projected to be approximately $140 million.
Raymond Dolan, President and Chief Executive Officer of Sonus, said: "The transaction is expected to generate significant near- and long-term value for shareholders, who we believe will benefit from their ownership in a combined company with increased scale and resources to invest in and accelerate each company's growth initiatives.
"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."
David Walsh, Chief Executive Officer and Chairman of Genband, added: "Like Sonus, Genband has transitioned its business to support this industry shift and we have seen improving profitability over the last couple of years and into 2017."