Menu
Mitel makes move for ShoreTel to create unified comms giant

Mitel makes move for ShoreTel to create unified comms giant

Stronger together as a global market leader in the rapidly growing UCaaS market

Rich McBee - CEO, Mitel

Rich McBee - CEO, Mitel

Mitel has announced plans to acquire ShoreTel in a US$530 million deal, creating a multi-billion dollar unified communications powerhouse in the process.

Targeting the unified communications-as-a-service (UCaaS) market, the acquisition - which is expected to close in the third quarter of 2017 - will see the vendor become the second largest player in the industry.

Specifically, the agreement will see Mitel acquire 100 per cent of the outstanding shares of ShoreTel common stock in an all-cash transaction at a price of US$7.50 per share, or a total equity value of approximately US$530 million and a total enterprise value of approximately US$430 million.

According to financial reports, the purchase price represents a 28 per cent premium to ShoreTel's closing share price on July 26, 2017.

Terms of the deal will also see the combined company headquartered in Ottawa, Canada, operating under the Mitel name with Rich McBee appointed CEO.

“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,” Mitel CEO Rich McBee said.

“Together, Mitel and ShoreTel will be able to take customers to the cloud faster with full-featured, cloud-based communications and applications.”

Aiming to be “stronger together” in the rapidly expanding UCaaS market, McBee said the deal allows Mitel to accelerate cloud strategy plans across the world, as the vendor taps into growing digital transformation demand.

In taking up the number two spot in the UCaaS market, McBee said the combined entity will create a supplier with the “scale and technical capabilities” to enable customers with new cloud-based solutions and applications.

From a channel perspective, the combined company will have approximately 3,200 channel partners, backed up by an expansive portfolio of communications and collaboration solutions.

Despite a lack of confirmation at this stage, both parties are expected to reassess go-to-market channel strategies in the coming months, before presenting a unified partner program in 2018.

“With the announcement today, this concludes our comprehensive review of strategic alternatives by delivering a significant cash premium for our shareholders,” ShoreTel CEO Don Joos added.

“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."

Once the transaction is complete, Joos said Mitel will be “uniquely positioned” to offer all customers the advantages of cloud-based communications.

For enterprise customers, ShoreTel's solutions aims to strengthen Mitel's ability to cloud-enable customers with existing premise or mixed estate deployments, creating a technical foundation for application deployment along the way.

With combined sales of US$1.3 billion, the acquisition also increases Mitel's total recurring revenue to 39 per cent of total revenue, more than doubling the vendor’s UCaaS revenue to US$263 million.

The acquisition comes almost a year to the day that Polycom dramatically pulled the plug on Mitel’s proposed US$1.9 billion acquisition of the company, scrapping the deal to go private instead.

Following a tense day of deliberating at the video conferencing vendor, over a years' worth of negotiating went off the table after the company accepted a rival US$2 billion bid from Siris Capital Group LLC, a private equity firm based in New York.

As reported by ARN, Polycom then officially ended the merger agreement, paying Mitel the $60 million termination fee after the vendor refused to raise its offer.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Cloudunified communicationsmitelShoretel

Featured

Slideshows

The making of an MSSP: a blueprint for growth in NZ

The making of an MSSP: a blueprint for growth in NZ

Partners are actively building out security practices and services to match, yet remain challenged by a lack of guidance in the market. This exclusive Reseller News Roundtable - in association with Sophos - assessed the making of an MSSP, outlining the blueprint for growth and how partners can differentiate in New Zealand.

The making of an MSSP: a blueprint for growth in NZ
Reseller News Platinum Club celebrates leading partners in 2018

Reseller News Platinum Club celebrates leading partners in 2018

The leading players of the New Zealand channel came together to celebrate a year of achievement at the inaugural Reseller News Platinum Club lunch in Auckland. Following the Reseller News Innovation Awards, Platinum Club provides a platform to showcase the top performing partners and start-ups of the past 12 months, with more than ​​50 organisations in the spotlight.​​​

Reseller News Platinum Club celebrates leading partners in 2018
Meet the top performing HP partners in NZ

Meet the top performing HP partners in NZ

HP has honoured its leading partners in New Zealand during 2018, following 12 months of growth through the local channel. Unveiled during the fourth running of the ceremony in Auckland, the awards recognise and celebrate excellence, growth, consistency and engagement of standout Kiwi partners.

Meet the top performing HP partners in NZ
Show Comments