Mitel to acquire ShoreTel as industry consolidation escalates

in News
August 10, 2017
Mitel to acquire ShoreTel as industry consolidation escalates

On July 27, 2017, Mitel announced a definitive agreement to acquire ShoreTel. The statement issued by both Mitel and ShoreTel positions the consolidation as accelerating Mitel’s move to high-growth in the UCaaS market.

  • Delivers attractive shareholder value with $60 million in future synergies
  • Moves Mitel into a #2 position in UCaaS market
  • Expected to be accretive in the first year

From the press release:

“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 in an all-cash transaction at a price of $7.50 per share, or a total equity value of approximately $530 million and a total enterprise value of approximately $430 million. The purchase price represents a 28% premium to ShoreTel’s closing share price on July 26, 2017. Stronger together as a global market leader in the rapidly growing UCaaS market.”

Continuing to deliver its move-to-the-cloud strategy, with this transaction Mitel is hastening on a growth path by investing further and faster into the UCaaS (Unified Communications as a Service) market as digital transformation fast-tracks 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.

Financial highlights of the transaction include:

  • Combined sales of $1.3 billion
  • Increases Mitel’s total recurring revenue to 39% of total
  • 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