Apax no longer in talks to buy Polycom

Apax Partners is no longer in talks to buy U.S. videoconferencing company Polycom Inc. (Nasdaq: PLCM), according to a source with knowledge of the matter.

Shares of Polycom fell nearly 7% on the news, erasing gains made the week before, when the Financial Times reported that Apax had been in talks since November to take Polycom private for more than $3 billion.

The two companies held discussions, but Apax did not make an offer, said the source, who declined to be identified because the talks were confidential.

Spokesmen from Apax and Polycom declined to comment.

While it was not clear why the talks had broken off, the recent rise in Polycom shares would have made it a much more expensive company for Apax to buy outright. Last week, the stock briefly rose to a high of $34.14 a share, up about 60% from its low point in November 2009.

The videoconferencing sector has experienced a flurry of acquisitions and is seen as a key growth area as companies seek to cut travel costs and innovate by installing, for example, remote customer service stations.

Giant networking company Cisco Systems Inc. is set to acquire Polycom’s Norwegian rival, Tandberg ASA and become the world’s largest videoconferencing company.

Also, Logitech International has agreed to acquire LifeSize Communications, an Austin, Texas-based provider of high-definition video communication solutions. The deal is valued at $405 million in cash. LifeSize had raised about $90 million in VC funding from Austin Ventures, Redpoint Ventures, Pinnacle Ventures, Norwest Venture Partners, Sutter Hill Ventures and Tenaya Capital.

Analysts say Polycom may still look attractive to other potential buyers, such as Silver Lake Partners or such companies as Alcatel-Lucent, Hewlett-Packard Co. and IBM.

Polycom, for its part, is focusing on expanding partnerships to fight off the Cisco-Tandberg behemoth. It has a strategic partnership with HP, under which HP will help resell Polycom products, expanding its sales reach. The deal also works for HP, as it allows it to offer customers a diverse menu of products and services. HP also competes with Cisco.

Apax’s previous technology and telecommunications investments include Kabel Deutschland, NXP Semiconductors, TDC A/S and Versatel Deutschland, according to its website. —Ritsuko Ando, Reuters