Ribbon Communications Inc., a US software and cloud communications firm, said Thursday it has entered into an agreement to buy Israeli communications equipment firm ECI Telecom for $324 million in cash.
The merger transaction 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 said in a statement.
Under the terms of the merger agreement, Ribbon will acquire all outstanding equity of ECI, and will issue 32.5 million shares of its common stock to ECI stockholders and provide $324 million of net cash.
Founded in 1961, the privately held ECI, once deemed one of Israel’s flagship tech firms, is a provider of products and solutions for communications and data transmission networks for service providers, infrastructure and government entities, as well as defense and security customers.
The Petah Tikva, Israel-based firm has some 1,700 employees and over 300 global customers. Total revenue for the 12 months ended September 30 was $376 million, the statement said.
Ribbon expects the merger to “position the company for growth and to enhance its competitive strengths by expanding its product portfolio,” the statement said. The combined company will also be able to serve the high-growth 5G communications market where ECI is a “leading vendor.”
“The ECI acquisition will extend Ribbon’s reach into the networking market and propel us into the global 5G market,” said Fritz Hobbs, president and chief
executive 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.”
“Both companies enjoy a distinguished operating history and are trusted suppliers to the world’s leading telecommunication service providers and enterprises,” said Darryl Edwards, president and chief executive officer of ECI, in the statement.
Last year, Reuters reported that the Israeli firm was seeking to list shares on the London Stock Exchange in a bid to pay off debt and increase visibility. ECI was acquired in 2007, when it was a publicly traded firm, for some $1.2 billion by the Swarth Group and other investors, who delisted the shares from Nasdaq.