Mitel (Nasdaq:MITL) (TSX:MNW) and ShoreTel (Nasdaq:SHOR) today announced that they have entered into a definitive merger agreement pursuant to which Mitel will acquire 100% of the outstanding shares of ShoreTel common stock.
Together, with their partner Mitel this merger paves the way for Trans-West Network Solutions to strengthen their position as an industry leader in the enterprise communications space here in Arizona and across the US.
Combining two companies in the same market provides a quick way to boost market share and catapults Mitel to number two in the Unified Communications as a Service (UCaaS) market, according to the company.
ShoreTel received a 28 percent premium over the closing stock price on July 26th, 2017. Mitel will pay $7.50 a share for a total value of $430 million in an all-cash deal.
Although Mitel attempted to buy ShoreTel in 2014 for $8.10 a share, the ShoreTel board rejected the offer, saying it significantly undervalued the company. ShoreTel peaked at around $10.32 a share in December 2015 before beginning a drop that bottomed out at $5.75 a share earlier this month. ShoreTel didn’t play hard to get this time around and could could have got more in 2014.
Continuing to deliver its move-to-the-cloud strategy, with this transaction Mitel is accelerating on a growth path by investing further and faster into the UCaaS (Unified Communications as a Service) market as digital transformation accelerates customer demand for cloud-based solutions globally. The combined company will be the #2 player in the UCaaS market, creating a supplier with the scale and technical capabilities to enable customers with new cloud-based solutions and applications.
The combined company will be headquartered in Ottawa, Canada, and will operate as Mitel. Rich McBee, Mitel’s Chief Executive Officer, will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role.
“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.”
The new company will have approximately 3,200 channel partners and an industry-leading portfolio of communications and collaboration solutions. Mitel and ShoreTel are committed to providing continued support and an attractive path forward for all customers and partners – cloud and premise. On closing of the proposed transaction, the combined company will have a global workforce of approximately 4,200 employees.
The deal is still subject to regulatory and shareholder review before it can close.
Once the transaction is complete, Trans-West Network Solutions together with Mitel will be uniquely positioned to offer all customers the advantages of cloud-based communications. For enterprise customers, ShoreTel’s solutions will strengthen Mitel’s ability to cloud-enable customers with existing premise or mixed estate deployments, creating the technical foundation needed for delivery of next-generation cloud applications.
Financial highlights of the transaction include:
- Combined sales of $1.3 billion*
- Increases Mitel’s total recurring revenue to 39% of total revenue*
- More than doubles Mitel’s UCaaS revenue to $263 million*
- Significant synergy opportunity targeted at $60M in annual run rate spend expected to be achieved over two years
- Expected to be accretive to non-GAAP EPS in the first year
*based on trailing twelve months combined to March 31, 2017
The transaction is expected to be completed in the third quarter of 2017, subject to ShoreTel stockholders having tendered shares representing more than 50% of the outstanding shares of ShoreTel common stock, certain regulatory approvals having been obtained and other customary conditions to the tender offer having been satisfied.
Trans-West Network Solutions is the top Telephone Equipment & Systems Provider in Arizona since 2014. Our CloudVoice hosted or premises based services bring a big business phone system to your business and is easy to manage. Using the breakthrough technology of voice over IP, you can efficiently use one connection for all of your communications needs. Trans-West also offers a Complete WiFi Network Platform designed specifically to transform your business.
To learn more about CloudWiFi, CloudVoice or our Digital Business Transformation Services contact Debi Caron at firstname.lastname@example.org or call us at 602-437- 3010.