Mitel has bought Aastra for $CAD392 million, creating a billion dollar company with a large global footprint in the Cloud and unified communications industry.
Canadian-based Mitel announced it will be purchasing all outstanding Aastra shares for US$6.52, plus 3.2 Mitel shares per Aastra share. Aastra shareholders will account for 43 per cent of the new company. The terms have been agreed to by both boards. A shareholder vote will be held in January 2014 to finalise the purchase, and it is expected to close first quarter 2014.
The new revenue stream for the company rolls in at $1.1 billion, while adding an R&D budget of $100 million, a large (but unspecified) reduction in the company's debt ratio and synergies of $45 million within two years, driven by supply chain optimisation, facilities consolidation and economies of scale.
Mitel will remain headquartered in Ottawa, Canada, and current Mitel CEO and president Richard McBee will continue to lead the company. Reporting to the CEO will be CFO Steve Spooner (Mitel), and Aastra's Co-CEOs, Francis Shen (who becomes CSO) and Tony Shen, who will take the position of COO.
It will continue to trade as Aastra in select European markets, and in Australia.
A spokesperson for Aastra Australia told ARN that the company will continue to trade as Aastra in Australia, until at least the end of this quarter (December 31st).
The Aastra Australia spokesperson would not be drawn on any further questions relating to the region's changes during the takeover.
New Mitel COO Tony Shen told ARN that negotiations had been underway for months, and a very few people were involved in the negotiations internationally, and "nobody in A-NZ was in the know."
"From today until the deal is closed, Mitel and Aastra operate as separate and publicly traded companies bound by very strict rules of engagement. From the deal closing (currently target in the first quarter of 2014), we will then operate as one combined company," he said.
Shen said that the Aastra's Australian channel partners should see no interruptions to their business.
"Both companies have an excellent track record of integrating businesses. We can ensure existing customers that we will put in place a swift transition with no interruption in business processes and in the support we provide. Priority 1 is protection of our installed base and continuity of products and services; migration is only at the customer’s pace."
The company will also be taking a structural and process review, but Shen would not be drawn on specifics regarding the A-NZ offices.
"Integration plans will be mapped out before and after closing of this transaction. It will be done on a country by country and region by region basis. Because of the size and scope of the combined businesses, we will be reviewing all levels of structure and processes," he said.
According to the company, the takeover now gives Mitel the No. 1 market share in Western Europe, a US$100 million Cloud business, and a global installed customer base ready for upgrade as the US$18 billion business communications market prepares to migrate to software-based Cloud services.
"The business communications market is ripe for consolidation and on the cusp of a mass migration to Cloud-based services. We believe that small competitors with narrow focus and limited global reach will quickly be marginalised," said McBee.
"Aastra's solid financial structure, complementary portfolios, geographic reach, and large installed-base immediately augment and expand Mitel's market footprint, enabling us to capitalise on a unique opportunity to leap-frog the competition and lead the market."
Mitel has also said it will increase the number of directors on its board from eight to nine. Two existing members of the Mitel board will step down and Aastra will have the right to appoint three new board nominees to fill the vacancies.
Mitel's takeover of Aastra gives it a market presence of over 60 million end users in more than 100 countries and a global network of more than 2,500 channel partners, making it one of the largest players in the unified communications space.
The company said that the merger means it will maximise its 'near-term installed base upgrade opportunities' in the APAC market, with a large focus on Cloud solutions.