Unified communications (UC) supplier Mitel is finally to get its hands on rival ShoreTel, after offering $7.50 per share in cash, representing an equity value of $530m and an enterprise value of $430m.
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Acquisitive Mitel has had eyes for ShoreTel for some time, having made a number of unsolicited approaches to buy the business back in 2014. At the time, it offered up to $574m, a substantial premium on today’s price, but was repeatedly rebuffed, prompting Mitel CEO Rich McBee to publicly write to ShoreTel’s board to express his disappointment.
Since then, Mitel has attempted to buy video-conferencing supplier Polycom, but was pushed out of the deal when a venture capital firm offered Polycom more money. It has also bought Toshiba’s UC business in an attempt to solidify its presence in the US market – something that ShoreTel will also bring it.
Mitel said the deal would help deliver its cloud UC strategy, making it the second-largest business in the burgeoning unified communications as a service (UCaaS) segment and giving it the scale and technical capability to develop new cloud-based comms services and applications.
“This is a very natural combination that enables us to continue to consolidate the industry and take advantage of cost synergy opportunities while adding new technologies and significant cloud growth to our business,” said Mitel CEO, Rich McBee. “Together, Mitel and ShoreTel will be able to take customers to the cloud faster with full-featured, cloud-based communications and applications.”
“With the announcement today, this concludes our comprehensive review of strategic alternatives by delivering a significant cash premium for our shareholders,” said Don Joos, CEO of ShoreTel.
“Customers are clearly moving to the cloud at a rapid pace. The combination of Mitel and ShoreTel creates a new UCaaS market leader with a differentiated strategy and solution, and a clear migration path so that no customer is left behind or will have to abandon what they already have to cloud-enable their organisation.”
The combined business, which will be based in Mitel’s home town of Ottawa in Canada, is expected to make sales of $1.3bn, with 39% of that coming from recurring UCaaS sales.
Subject to the usual caveats and rules, the deal will close some time in the third quarter of the year.