Polycom (PLCM) to Sell Wireless Voice Unit in $110M Deal; Boosts Buyback; Guides Q2 EPS Below Views
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Polycom, Inc. (Nasdaq: PLCM), announced a definitive agreement to divest its enterprise wireless voice solutions business to an affiliate of Sun Capital Partners, Inc. for gross proceeds of approximately $110 million in cash, subject to certain adjustments set forth in the agreement.
The sale is expected to close within the third quarter of 2012, following the satisfaction of regulatory requirements and other customary closing conditions. Polycom’s Board of Directors has approved an increase in its current share repurchase authorization to include net proceeds of approximately $104 million from this transaction, contingent upon the sale of the enterprise wireless voice solutions business and receipt of the net proceeds from the sale.
Prior to this transaction, Polycom had a share repurchase authorization of $800 million, of which approximately $78 million was remaining as of May 10, 2012. Contingent upon the close of this transaction and receipt of the net proceeds, Polycom will be increasing its total remaining authorization from approximately $78 million to approximately $182 million.
“Polycom has a leading-edge UC platform and a strong, debt-free balance sheet,” said Eric Brown, Chief Operating Officer and Chief Financial Officer of Polycom. “With the announced sale of our enterprise wireless voice solutions business, we will continue to focus on our core platform and extend our practice of enhancing shareholder value through repurchases, while maintaining a healthy and flexible balance sheet.”
Share repurchases may be made through open market and privately negotiated transactions at times and in such amounts as determined by management. The number and timing of shares purchased will be based on Polycom’s available cash balances, general business and market conditions, the dilutive effects of share-based incentive plans, alternative investment opportunities and working capital needs.
For the second quarter of 2012, Polycom expects that:
On a GAAP basis:
The sale is expected to close within the third quarter of 2012, following the satisfaction of regulatory requirements and other customary closing conditions. Polycom’s Board of Directors has approved an increase in its current share repurchase authorization to include net proceeds of approximately $104 million from this transaction, contingent upon the sale of the enterprise wireless voice solutions business and receipt of the net proceeds from the sale.
Prior to this transaction, Polycom had a share repurchase authorization of $800 million, of which approximately $78 million was remaining as of May 10, 2012. Contingent upon the close of this transaction and receipt of the net proceeds, Polycom will be increasing its total remaining authorization from approximately $78 million to approximately $182 million.
“Polycom has a leading-edge UC platform and a strong, debt-free balance sheet,” said Eric Brown, Chief Operating Officer and Chief Financial Officer of Polycom. “With the announced sale of our enterprise wireless voice solutions business, we will continue to focus on our core platform and extend our practice of enhancing shareholder value through repurchases, while maintaining a healthy and flexible balance sheet.”
Share repurchases may be made through open market and privately negotiated transactions at times and in such amounts as determined by management. The number and timing of shares purchased will be based on Polycom’s available cash balances, general business and market conditions, the dilutive effects of share-based incentive plans, alternative investment opportunities and working capital needs.
For the second quarter of 2012, Polycom expects that:
On a GAAP basis:
- The enterprise wireless voice solutions business, which will be considered discontinued operations, and after inclusion of amortization of purchased intangibles and other GAAP expenses will net to approximately $0.00 of earnings per share, and
- Approximately $0.01 to $0.03 of earnings per share will be attributable to continuing operations, which reflects an additional $0.02 in restructuring and other GAAP charges versus our April 18, 2012 guidance.
- Approximately $0.02 of earnings per share will be attributed to the enterprise wireless voice solutions business, which will be considered discontinued operations and excluded from our non-GAAP results, and
- Approximately $0.18 to $0.20 of earnings per share will be attributable to continuing operations. The Street sees EPS of $0.21.
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