hp completes acquisition of poly2

HP announced today that it has completed the acquisition of the workplace solutions company called Poly roughly five months after the deal was announced.

Poly manufactures and sells equipment that can be used by individuals and organizations for communicating and interacting virtually. Its top products include phones, headsets, and webcams.

Back in March this year, HP informed the investment community that it will be acquiring Poly for $3.3 billion in an all-cash transaction. The figure included Poly’s net debt and would effectively make the firm a private entity as its shares previously traded under the ticker symbol POLY.

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“This is a historic day for our business as we mark the union of two iconic companies that are innovating at the heart of hybrid work”, Lores commented about the completion of the acquisition.

During the pandemic, workers were forced to set up relatively improvised home offices and companies had to provide the required equipment to allow them to perform their regular activities in the best way possible.

With this bet in Poly, HP appears to be betting that this trend will become the norm in the future even after the health crisis is over.

HP Deem Peripherals and Workplace Solutions Markets a $200 Billion Opportunity

“The rise of the hybrid office creates a once-in-a-generation opportunity to redefine the way work gets done”, stated the Chief Executive Officer of HP, Enrique Lores, to justify the acquisition.

He added: “Combining HP and Poly creates a leading portfolio of hybrid work solutions across large and growing markets. Poly’s strong technology, complementary go-to-market, and talented team will help to drive long-term profitable growth as we continue building a stronger HP”.

According to HP, the workplaces solutions market is growing at a rate of around 8% per year and it is valued at approximately $120 billion. Firms such as Zoom, Google Meet, and Microsoft Teams provide the IT infrastructure for individuals to communicate easily by using their laptops and smartphones.

Meanwhile, the company has valued the peripherals market as a $110 billion segment that is growing at a rate of around 9% annually. In this particular market, competition may come from firms including Logitech, Microsoft, Razer, and Corsair.

HP’s bet on hybrid work is now getting more serious as the acquisition of Poly has been completed. The company aims to create an entire ecosystem of devices, software, and experiences that can be easily embraced by organizations to power their day-to-day activities.

Andy Rodhes has been appointed by HP for running the combined entity resulting from the merger between HP’s peripherals unit and Poly.

HP Aims to Improve the Fundamentals of Poly’s Business via Synergies

The acquisition of Poly will be accretive to HP right after the companies are merged. HP expects to generate revenue synergies of $500 million by 2025 as a result of the deal and Poly’s revenue growth is expected to accelerate to around 15% per year during the three years following the acquisition.

Moreover, the acquired business is expected to see its operating margins improve by around 6% by 2025 as well.

During the first quarter of its 2023 fiscal year, Poly reported total revenues of $415.6 million. The majority of that figure came from product sales. Meanwhile, the company produced an operating loss of $15 million and a net loss of $33.1 million.

By the end of that period, Poly had long-term debt of $1.5 billion on total assets of $2.17 billion including $142.36 in cash and equivalents and $11.9 million in short-term investments.

Even though the acquisition was settled in cash, HP issued $2 billion in senior unsecured notes back in June including $900 million in notes due in 2028 carrying an interest rate of 4.75% and another $1.1 billion tranche of notes maturing in 2033 and carrying an interest rate of 5.5%.

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