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LONDON, UK / ACCESSWIRE / May 25, 2017 / Active Wall St. blog coverage looks at the headline from Westford, Massachusetts based Sonus Networks, Inc. (NASDAQ: SONS) and Plano, Texas based privately owned GENBAND announced the signing of a merger agreement on May 23, 2017. Sonus is a market leader in cloud-based session initiation protocol (SIP) and 4G/LTE solutions and GENBAND is a global leader in carrier and enterprise network transformation and cloud based real-time communications software solutions and services. The merger will result in leading global Company in real-time communications software solutions with an enterprise value of approximately $745 million. Register with us now for your free membership and blog access at:

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One of Sonus Networks' competitors within the Communication Equipment space, CommScope Holding Co., Inc. (NASDAQ: COMM), reported on May 04, 2017, its earnings results for Q1 2017 which ended on March 31, 2017. AWS will be initiating a research report on CommScope Holding in the coming days.

Today, AWS is promoting its blog coverage on SONS; touching on COMM. Get all of our free blog coverage and more by clicking on the link below:

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The combined revenue and EBITDA of the two Companies for FY16 would have been approximately $680 million and $50 million, respectively.

Commenting on the merger Raymond Dolan, President and 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."

David Walsh, CEO and Chairman of GENBAND, added:

"With this combination, we believe our complementary product portfolios and expanded global footprint will allow us to even better respond to the evolving needs of customers. Our heritage and culture fit perfectly together and the combined talent going forward is second to none. This is truly an ideal combination."

The speculation about the merger of Sonus and GENBAND had started doing the rounds in May 2016. However, they were not substantiated, till this recent announcement.

Terms of the merger

As per the merger agreement signed by both companies, Sonus and GENBAND will merge and come under a newly formed holding Company. Sonus' shareholders will receive one share of the merged Company for each Sonus' share they hold. The merged Company will issue approximately 50 million shares and $22.5 million of consideration in the form of an unsecured note to GENBAND. Once the transaction is completed shareholders of Sonus and GENBAND will own 50% stake each in the merged entity.

The transaction has already been approved by the Boards of Directors of both Companies. The transaction is expected to be completed in H2 2017 and is subject to regulatory and shareholders' approvals and other closing conditions.

The merged Company is planned to be listed at the NASDAQ exchange.

Once the transaction is completed, the combined Company's top management will include Raymond Dolan as CEO; Daryl Raiford as CFO (currently CFO of GENBAND); and David Walsh will head the Kandy business (which will be a separate division in the merged Company) and also oversee the integration of the businesses of both Companies. Kandy is GENBAND's cloud communications platform as a service (CPaaS) for global service providers and enterprises. The Board of Directors of the merged Company will have five members from GENBAND and four members from Sonus. Richard Lynch, the current Chairman of Sonus' Board will take over as the merged Company's Chairman of Board.

Benefits of the merger

The merger is expected to be accretive to Sonus' EPS in FY18. The merger will lead to annual cost synergies between $40 million - $50 million by the end of FY18. Post the merger, the operations of the merged Company will increase cash flow in the first year of closing. Due to the various expected annual synergies, the merged Company is expected to generate at least $100 million in annual EBITDA. The projected EBITDA for the fiscal year 2020 is approximately $140 million.

Both Sonus and GENBAND have strengths in software based real-time communications, Sonus' focus has been on cloud-based session initiation protocol (SIP) and VoLTE products, while GENBAND focused on network modernization and unified communications solutions. Therefore, the merged Company will have very little product overlap.

The merged Company will have a wider client base and global footprint. The merged Company is expected to have presence in 27 countries. US and Canada will be the most important regions as the combined revenues of the two Companies from these region in FY16 was 67%.

Sonus and GENBAND have put in place highly complementary growth initiatives. GENBAND has improved its Kandy platform. Sonus has recently launched a cloud security and analytics platform for real time flows and digital services. These initiatives are highly beneficial to their customers.

Stock Performance

On Wednesday, May 24, 2017, the stock closed the trading session at $7.03, tumbling 11.01% from its previous closing price of $7.90. A total volume of 1.71 million shares have exchanged hands, which was higher than the 3-month average volume of 526.54 thousand shares. Sonus Networks' stock price surged 3.99% in the last month, 18.75% in the past three months, and 13.75% in the previous six months. Furthermore, on a year to date basis, the stock advanced 11.59%. At Wednesday's closing price, the stock's net capitalization stands at $344.12 million.

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