RingCentral Inc. agreed to become the exclusive provider of unified communications as a service solutions to Avaya Holdings Corp.
Under the agreement, the two entities will introduce a new service, called Avaya Cloud Office by RingCentral. The companies will jointly develop programs to leverage Avaya's global sales and partner network, as well as build automated technologies for customers to transition to RingCentral's global unified communications as a service solutions offering.
Accordingly, Avaya and RingCentral will jointly develop programs, technologies and automation to facilitate the transition of Avaya's unified communications customer base to the cloud.
The companies will contribute resources toward the development and sales and marketing of Avaya Cloud Office. RingCentral will pay Avaya an advance of $375 million, which will be paid primarily in stock, predominantly for future commissions, as well as certain licensing rights.
RingCentral will also purchase $125 million of 3% convertible and redeemable preferred stock, obtaining about a 6% position in Avaya on an as-converted basis.