NEW YORK (TheStreet) -- Shares of Polycom (PLCM) are declining 0.65% to $12.19 on heavy trading volume on Friday afternoon after Mitel Networks Corp. (MITL) agreed to acquire the company in a $1.96 billion transaction.
Mitel agreed to pay $3.12 in cash and 1.31 Mitel common shares for each Polycom share. Based on the price of both stocks on April 5, the deal represents a 22% premium to Polycom shares.
The transaction is expected to close in the third quarter of this year and is subject to shareholder and regulatory approval.
The combined company will be headquartered in Ottawa and will be 60% owned by Polycom shareholders, but will operate under Mitel's name.
San Jose, CA-based Polycom offers solutions for voice, video and content sharing.
Mitel, which is based in Ottawa, is a provider of business communications and collaboration software, services and solutions.
"Together with industry-leading voice communications from Mitel, the combined company will have the talent and technology needed to truly deliver integrated solutions to businesses and service providers across enterprise, mobile and cloud environments," Mitel CEO Rich McBee said in a statement.
Shares of Mitel are dipping 8.76% to $7.19 on heavy trading volume early this afternoon. Roughly 9.3 million of the company's shares changed hands so far today compared to its average volume of 332,676 shares per day.
About 13.09 million of Polycom's shares were traded by early this afternoon vs. its average volume of 873,338 shares per day.
Separately, TheStreet Ratings Team has a "Buy" rating with a score of B- on Polycom stock.
The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins.
The team believes its strengths outweigh the fact that the company has had sub par growth in net income.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: PLCM