Avaya News: AVYA Stock Rockets on RingCentral Deal

A deal between Avaya (NYSE:AVYA) and RingCentral (NYSE:RNG) has AVYA stock soaring higher on Friday.

Avaya News: AVYA Stock Rockets on RingCentral Deal

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An Avaya news release about the deal details that it will have the company bringing its services to the cloud with the help of RingCentral. This will result in the launch of Avaya Cloud Office by RingCentral, which will be a global unified communications as a service solution.

The deal between Avaya and RingCentral also includes a $500 million payment from the latter to the former. The largest portion of this is an advance of $375 million, mostly in the form of stock. This will cover future payments and some licensing rights.

The remaining $125 million from RingCentral will be a direct investment into Avaya. This will gain it 3% redeemable preferred equity that is convertible to $16 per share. That results in the company having a 6% stake in AVYA stock.

The Avaya news release notes that the two companies are still waiting for approval from regulators before the deal closes. The deal doesn’t require shareholder approval and has the unanimous support of both companies’ Boards of Directors. So long as everything goes well, they expect it to close during the fourth quarter of the year.

The same Avaya news release also mentions that the company has approved a $500 million share repurchase program. It is also planning to pay down a total of $250 million in debt.

AVYA stock was up 28% and RNG stock was up 25.60% as of Friday afternoon.

As of this writing, William White did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/10/avaya-news-has-avya-stock-soaring/.

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