The rival bid would see Polycom stockholders receive a cash dividend of USD 11.00 per share and the new owner would purchase from Polycom USD 650 million of new convertible preferred stock. This would give Sponsor 1 56 percent of Polycom's shares. The conversion price of the new preferred stock would be USD 3.50 per share, and the preferred stock would have an in-kind dividend pay-out of 8 percent. Polycom shareholders could also opt to receive the cash dividend in up to USD 250 million of the new convertible preferred stock, reducing Sponsor 1's pro rata share.
As an alternative, Sponsor 1 said it would also consider taking Polycom private in an offer worth USD 11.50 per share in cash and a contingent value right worth up to USD 3.00 per share. Under Sponsor 1’s proposal, the cash dividend, the repayment of Polycom’s existing debt and the termination fee payable to Mitel would be funded with the proceeds of the sale to Sponsor 1 of the USD 650 million of preferred stock, USD 870 million of new debt financing, and cash on Polycom’s balance sheet (including both onshore and offshore cash).
Mitel agreed in April to acquire Polycom for USD 1.96 billion in cash and Mitel shares. Mitel said in a statement that its offer, which is backed by some large shareholders of Polycom, "offers superior and greater upside to both Polycom and Mitel". Under the Mitel bid, Polycom shareholders would own 60 percent of the merged company, and the combined group also would benefit from synergies and the certainty of committed financing.
