RingCentral Inc. is partnering with Avaya Holdings Corp. to introduce new global unified communication as a service solution called "Avaya Cloud Office by RingCentral."
As part of the deal, both companies will contribute resources towards the development, sales and marketing of the new solution, and RingCentral will pay Avaya an advance of $375 million for future commissions, as well as certain licensing rights, which will be paid primarily in stock.
RingCentral and Avaya agreed to jointly develop programs, technologies, and automation to facilitate the transition of Avaya's unified communications customer base to the cloud. The partnership makes RingCentral the exclusive provider of UCaaS solutions to Avaya.
RingCentral will also purchase $125 million aggregate principal amount of 3% convertible and redeemable preferred stock, acquiring about a 6% position in Avaya on an as-converted basis. This will be funded with existing cash on the balance sheet.
"This strategic partnership leverages the respective strengths of Avaya and RingCentral to provide a definitive differentiated solution," RingCentral founder, Chairman and CEO Vlad Shmunis said.
Avaya, which emerged from bankruptcy almost two years ago, was earlier reported to be in talks to form a joint venture with RingCentral.
Goldman Sachs & Co. LLC is serving as an exclusive adviser to RingCentral. Wilson Sonsini Goodrich & Rosati is serving as an exclusive legal counsel to RingCentral.
