Tag: mitel

Mitel buys rival and becomes super-company

1920s-telephone-advertComms vendor Mitel has acquired rival ShoreTel for $530 million to create a $1.3 billion company.

The deal, which consists of an all-cash transaction at a price of $7.50 per share, or a total equity value of around $530 million, represents a 28 percent premium on ShoreTel’s closing share price as of 26 July 2017. The deal is expected to close in the third quarter of this year.

Mitel claims the deal will make it the second largest unified communications as-a-service vendor in the market, doubling its revenues to $263 million.

The vendor also claims that the deal will make Mitel’s recurring revenue streams account for 39 percent of overall sales.

The combined entity will have around 3,200 channel partners and boast a global workforce of 4,200 employees.

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

Last year Mitel put in a $1.96 billion bid to buy videoconferencing vendor Polycom, but was snubbed months after when the firm was offered $2 billion by private equity firm Siris Capital.

Mitel decimates workforce

ob_69e675_13466500-10205097068386116-52360299429Mitel has sold its mobile division and is now gearing up to decimate its remaining workforce

Ten percent of its workforce are being handed their pink slips and told to clean out their desks just a year after the comms giant was close to doubling in size last year through its proposed acquisition of Polycom.

The deal went tits up when Polycom got a higher bid.

Now, the emphasis for Mitel is to get as slim as possible, although other acquisitions are believed to be possible.

In February, Mitel completed the sale of its mobile division to the parent company of Xura, saying it would use the $350m cash proceeds to pay down its credit facility. This reflected its strategy to focus on the unified communications and collaboration market.

Getting rid of staff will result in the outfit taking a charge in the range of $25 million to $35 million this year.

Mitel chief executive Richard McBee said that with the mobile divestiture finished the outfit was taking a “proactive cost reduction action to align its operating expenses with our current and future business investment needs”. With language like that we can sort of see Mitel’s problem – a company which can’t say “sacking staff to save money” might be having difficulties facing broader reality issues.

McBee said he was “pleased” with the Q1 results, and “especially pleased” with Mitel’s performance in its larger European markets “where Mitel’s financial strength helps us to expand on our leadership position in the region”.

Mitel’s GAAP net losses widened year on year during the quarter ending 31 March 2017, from $12.9m to $19.7m, on revenues that fell slightly from $228.1 million to $223.1 million.