Channel Chatter: RingCentral Considering 8×8 Takeover for CCaaS

RingCentral has approached 8×8 about a possible takeover. This is according to an unnamed Investing.com source who says that RingCentral is working with an investment bank to evaluate a potential transaction.

Neither company was available for comment by Tuesday afternoon.

What’s the rationale for the possible deal? RingCentral is likely eyeing 8×8’s contact-center-as-a-service (CCaaS) solution.

COMMfusion’s Blair Pleasant

Blair Pleasant is president and principal analyst of COMMfusion.

“This acquisition would provide RingCentral with easy access to its own CCaaS offering, as well as communications platform as a service (CPaaS),” Pleasant said. “While RingCentral’s partnership with NICE is doing very well and NICE CXone is a superior product, many people believe that RingCentral should have its own CCaaS solution.”

Last year RingCentral and NICE announced a multiyear expansion and extension of their long-term agreement to market and sell RingCentral Contact Center worldwide. The RingCentral Contact Center integrates NICE’s CXone cloud contact center with RingCentral’s cloud message video phone platform.

Beneficial to Partners?

“It’s been clear for a long time that industry consolidation is necessary in the UCaaS space, so it’s no surprise that RingCentral would be looking to acquire a key competitor,” Pleasant said.

The possible 8×8 acquisition would most likely be beneficial to partners, as it takes a key RingCentral competitor out of the equation. It provides a larger installed based for adding enhanced services and value.

“If the deal goes through – and that’s a big if – there would of course be the usual integration and migration issues facing both companies. It would be challenging for channel partners initially, as these things always are,” Pleasant said. “I would expect to see a pretty clear road map emerge fairly quickly, combining RingCentral message, video and phone with 8×8’s CCaaS and CPaaS offerings.”

She added that the acquisition would also bring David Sipes, 8×8 CEO, back into the fold. Sipes previously was COO of RingCentral, leading go-to-market and product.

“It was a big loss to RingCentral when he moved over to 8×8. Bringing Sipes back to RingCentral would be beneficial based on his sales and product expertise,” Pleasant said.

8×8’s stock was trading at $4.19 at 3 p.m. on Tuesday. That’s down from a 52-week high of $22.15. However, 8×8’s  revenue last quarter was up 24% from a year ago, at $187.4 million. Some attribute the company’s growth due to its Fuze acquisition.

A jump in revenue didn’t mean 8×8 avoided layoffs this year. In October, the company let go nearly 200 of its employees, roughly 10% of its workforce.