On October 31, 2019 Avaya and RingCentral announced the formal closing of their partnership to “Accelerate Transformation to the Cloud”. Moving forward, Avaya and RingCentral will introduce a new solution, the Avaya Cloud Office by RingCentral (“Avaya Cloud Office”), which will be the exclusive public Unified Communications as a Service (“UCaaS”) solution marketed and sold by Avaya. Avaya Cloud Office combines RingCentral’s leading UCaaS platform with Avaya’s technology, services and migration capabilities to create a highly differentiated UCaaS offering. The transaction included RingCentral’s commitment of a $500 million investment in Avaya. The first phase is a $125 million preferred equity investment, “a 3% redeemable preferred equity that is convertible at $16 per share”. RingCentral will also pay Avaya an advance of $375 million, predominantly for future commissions, as well as certain licensing rights called the Consideration Advance. The Consideration Advance will be paid primarily in stock.
Avaya has stated that “The Avaya Cloud Office expands the company’s industry-leading portfolio to offer a full suite of UC, CC, UCaaS and CCaaS solutions to a global customer base, which includes more than 120,000 customers, over 100 million UC lines and 5 million CC users in over 180 countries.”
The structure of the partnership is positioned 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 moving forward for Avaya customers and favorable compensation for Avaya and its partners.
Both companies are expected to “jointly develop programs to leverage Avaya’s global sales and partner network, as well as build automated technologies for seamless customer transition to RingCentral’s leading global UCaaS solution.” ACO is expected to launch in the first quarter of 2020.
