Mitel Increases Bid for ShoreTel
November 10, 2014
Mitel has upped its offer for ShoreTel (News - Alert), at which the former company made its initial pass last month. The new offer is valued at about $574 million, or $8.50 per share. That’s up from the $540 million/$8.10 per share offer Mitel made and ShoreTel rejected in October.
"We continue to believe that the combination of our two companies offers a compelling opportunity to add sustained value to both organizations, and to solidify our combined leadership position in a highly competitive and rapidly consolidating market," Richard McBee, Mitel (News - Alert) president and CEO, said in the offer letter. "In addition to the obvious benefit of an immediate and significant premium for ShoreTel shareholders, a combination of our two companies would create far superior value than could reasonably be obtained by ShoreTel as a standalone entity."
ShoreTel, as of this morning when this story was posted, had not issued a response to the new offer.
McBee added in the offer letter Mitel sent to ShoreTel that the latter company has decided not to engage with Mitel directly, but that Mitel has had discussions with a number of ShoreTel’s largest shareholders, whom he wrote, “support the logic and understand the benefits of a combination….”
Those benefits, the letter says, include creating the industry’s fastest growing cloud business with No. 1 market share by revenue and No. 2 market share by recurring cloud seats; achieving $450 million in annual recurring revenue; and delivering significant near-term operational and execution efficiencies.
“We are increasing our proposal without having had the benefit of any additional due diligence,” McBee wrote in the letter, which said the offer will be open until 5 p.m. Eastern Standard Time on Nov. 20. “We trust this further demonstrates our conviction in a transaction and encourages you, your Board and your management team, to sit down with us to move toward a negotiated transaction.”
As TMCnet reported previously, Mitel’s move to buy ShoreTel aims to better position the former company to be a key player in what it says is a rapidly consolidating UC market. Mitel, which in the past 18 months has doubled in size and expanded its portfolio and reach, has already done a fair amount of acquisition in recent years. In March, Mitel bought contact center company OAISYS; in January it snapped up Aastra (News - Alert); contact center company prairieFyre joined Mitel in June 2013; and Mitel acquired Inter-Tel in April 2007.
"Mitel has undergone a massive transformation. We have emerged as a truly global industry leader in our market," McBee said. "We have the strongest market position we have ever had. Our award-winning cloud solutions offer Mitel customers the best path to cloud communications, and they have given us the fastest-growing cloud business in our sector. We also have the broadest portfolio in the industry. This combination enables us to address the needs of all kinds of customers, from the smallest to the largest organizations. The new Mitel is a company on the move…."
Edited by Stefania Viscusi
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