Videoconferencing Blockbuster: HP Inc. To Acquire Poly For $3.3B

The combined companies will make a huge play in the hybrid work market after the pandemic created a lasting work-from-home movement. The news sent Poly stock soaring nearly 50 percent in early trading.

HP Inc. on Monday announced a blockbuster deal Monday to acquire Poly, a global provider of video conferencing hardware, conference phones and headsets, for $40 per share or $3.3 billion (including Poly debt) in a bid to boost HP’s hybrid office business.

Palo Alto, Calif.-based HP said it wants to bolster its peripherals offerings after the last two years of worldwide pandemic life has forced a huge increase in work-from-home and hybrid office needs.

“The rise of the hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done,” Enrique Lores, HP’s president and chief executive, said in a statement. “Combining HP and Poly creates a leading portfolio of hybrid work solutions across large and growing markets.”

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Poly was born out of a 2018 $2 billion acquisition of video and audioconferencing company Polycom by Plantronics, which offered office-based headsets. This isn’t the first peripheral move HP has made: Last year, HP bought gaming peripherals business HyperX for $425 million, a company that specializes in gaming headsets for both PCs and console systems.

HP will use a combination of balance sheet cash and new debt to finance the acquisition, the company said in a call Monday with investors.

Alex Cho, HP’s president of personal systems, told CRN, “I really think this is going to be a real win-win. Think about it from a channel perspective – they’re going to get a portfolio that is so meaningful for the future. This is about hybrid work … (channel partners) will be able to cross sell and upsell all these new innovative solutions that we have planned together.”

Poly CEO Dave Shull said in a statement that the acquisition provides an opportunity for both companies to expand their reach. “I am thrilled about the opportunity this represents for Poly, our employees, partners and customers,” he said. “The combination gives us an opportunity to dramatically scale, reaching new markets and channels, supercharging our innovation with a like-minded partner. This transaction offers compelling and certain value for our shareholders and speaks to the hard work done by our teams to become a recognized leader in helping businesses everywhere meet the challenges of a generational disruption in the way people work.”

Gainesville, Va.-based solution provider NCS Technology partners with both HP and Poly. Mike Turicchi, vice president at NCS, said he was surprised by Monday’s announcement. “I think it’s a great acquisition,” he said. “It’s smart on their part to address a broader portion of solutions and it’s consistent with our own strategy. The HyperX purchase didn’t really address the business needs of video, so this was a good move. And this brings it closer to one-stop shopping for us as a partner to both companies.”

Turicchi sees hybrid work as a part of his company’s future for a long time. “We’re just not seeing the shift back to the office – people are going back where needed, but by and large working remotely is here to stay and it’s proven to be effective. This has enabled us to broaden our offering and to capture market with peripheral devices.”

HP expects to close the acquisition by the end of this year once they get approval from Poly shareholders and federal regulators.

Lores said the company still intends to fulfill a plan to buy back $4 billion of HP shares in fiscal year 2022.

Poly has seen recent financial struggles, with flat revenue performance and supply chain issues. The company recently projected $1.7 billion in revenue for fiscal 2022, down from $1.74 billion in fiscal 2021.

HP, on the other hand, posted record revenues in its most recent quarter. The company said it expects to realize $500 million of revenue synergies from the purchase by 2025 and hopes to speed Poly’s growth rate to 15 percent annually within the first three years.

Poly’s Friday stock close was $26.20, so the $40 per-share sale acquisition price represents a 53 percent premium. The purchase news sent Poly stocks soaring Monday morning to about $38.94 per share – up nearly 50 percent in the first hour of trading.

On Poly’s most recent investor call, Shull said: “The future of work is hybrid, which is to say for any given workforce, some percentage of folks will be remote, some percentage of the time, while the balance will be in the office.”