Sonus Networks And GENBAND To Merge - Quick Facts

( - Sonus Networks, Inc. ( SONS ) and GENBAND announced a definitive agreement under which the two companies will merge under a newly formed holding company. GENBAND is a global leader in real-time communications software solutions for service providers, enterprises, independent software vendors, systems integrators and developers in over 80 countries. Each Sonus shareholder will receive one share of common stock in the combined company for each existing Sonus share they own. The combined company will issue approximately 50 million shares of common stock to GENBAND's equity owners as well as $22.5 million of consideration in the form of an unsecured note. Sonus and GENBAND shareholders will each own approximately 50% of the combined company. The transaction values the combined company at an enterprise value of approximately $745 million.

The transaction is expected to be substantially accretive to Sonus' earnings per share in 2018. The combined company is expected to realize 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 2020 EBITDA projected to be approximately $140 million.

The Chief Executive Officer of the combined company will be Dolan. Walsh will oversee the Kandy business, a division of the combined company and currently GENBAND's cloud communications platform as a service (CPaaS) for global service providers and enterprises. Daryl Raiford, CFO of GENBAND, will serve as Chief Financial Officer of the combined company. The Board of the combined company will have five representatives designated by GENBAND and four representatives designated by Sonus.

Sonus reconfirmed its 2017 second quarter and full year outlook, as previously provided on April 26, 2017. Sonus noted that it intends to update its guidance to include GENBAND following the close of the transaction, which is expected to occur in the second half of 2017.

Raymond Dolan, CEO 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."

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