Avaya, an American tech company specializing in unified business communications, and RingCentral, a provider of cloud-based communications for small businesses and enterprise companies, have announced a strategic partnership for a new cloud offering worth at least USD 500 million. RingCentral’s multi-million contribution includes a one-time USD 125 million preferred equity investment and a USD 375 million advance to Avaya for selling the RingCentral unified communications as-a-service (UCaaS) solution in selected countries.
According to the terms of the agreement, Avaya will introduce a new global UCaaS solution called Avaya Cloud Office by RingCentral (Avaya Cloud Office) in the first quarter of 2020. Avaya Cloud Office will build up the company’s existing portfolio to offer a full suite of UC, CC, UCaaS and CCaaS solutions to a global customer base, which currently includes more than 120000 customers, over 100 million UC lines and 5 million CC users in over 180 countries. This solution will combine RingCentral’s UCaaS platform with Avaya technology, services and migration capabilities to create a highly differentiated UCaaS offering.
Jim Chirico, President and CEO at Avaya, said, “Avaya and RingCentral’s joint investment and commitment to bringing Avaya Cloud Office to market creates an unprecedented opportunity to accelerate the transition to the cloud with attractive economics for our customers and partners. 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. 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.”
Vlad Shmunis, Founder, Chairman and CEO at RingCentral, said, “This strategic partnership leverages the respective strengths of Avaya and RingCentral to provide a definitive differentiated solution. We are excited to bring RingCentral’s leading UCaaS platform to Avaya’s installed base of over 100 million users and over 4700 partners, providing long-term growth opportunities for both our companies.”
With this move, RingCentral will obtain an approximately 6% position in Avaya on an as-converted basis. The companies said that this agreement is expected to close in the fourth quarter of this year, subject to customary closing conditions and regulatory approvals.