RingCentral to Provide UCaaS Solutions for Avaya

RingCentral, a Belmont, California-based provider of Unified Communications as a Service (UCaaS), announced an alliance in which it will become the exclusive provider of UCaaS solutions to Avaya. The two companies plan to jointly develop programs to leverage Avaya’s sales and partner network, as well as build a new solution called, “Avaya Cloud Office by RingCentral.” The alliance is also intended to help Avaya’s customer base transition to the cloud.

“This strategic partnership leverages the respective strengths of Avaya and RingCentral to provide a definitive differentiated solution,” said Vlad Shmunis, Founder, Chairman and CEO, RingCentral. “We are excited to bring RingCentral’s leading UCaaS platform to Avaya’s installed base of over 100 million users and over 4,700 partners, providing long-term growth opportunities for both our companies.”

Under the commercial agreement, both companies will contribute resources towards development and sales & marketing of Avaya Cloud Office. RingCentral will pay Avaya an advance of $375 million, predominantly for future commissions, as well as certain licensing rights. RingCentral will also purchase $125 million aggregate principal amount of 3% convertible and redeemable preferred stock, obtaining approximately a 6% position in Avaya on an as-converted basis.

“This also gives us the opportunity to unlock value from a largely unmonetized base of our business as it brings compelling value to our customers and partners,” said Jim Chirico, President and CEO of Avaya. “We believe this highly complementary partnership is a game changer that expands the total addressable market for Avaya and creates meaningful value for both Avaya and RingCentral.”

This agreement, which apparently does not require shareholder vote of either company, is subject to customary regulatory approvals, and is expected to close in Q4 2019. The Board of Directors of both companies have unanimously approved the transaction.

Channel Impact^®
This collaboration is expected to enable Avaya’s customers to leverage their existing investments while drastically reducing migration complexities and timeframes. Avaya Cloud Office is expected to provide an attractive total cost of ownership for Avaya customers and favorable compensation for Avaya and its partners.