Updates in the Telecom World: Mitel’s Acquisition of ShoreTel

Updates in the Telecom World: Mitel’s Acquisition of ShoreTel

Towards the end of July there was a huge surprise in the telecommunications world when Mitel announced that it would acquire ShoreTel for a whopping $430 million. According to Mitel, the main goal of acquiring ShoreTel was to increase their market share. Mitel is now sitting at number two in the market for Unified Communications as a Service (UCaaS).

The deal, which is made up of all cash, will include Mitel paying $7.50 a share for the total of $430 million. Even though ShoreTel is being absorbed in the recently announced deal, the company will receive a 28 percent premium on its stock. This is not the first time Mitel attempted to purchase ShoreTel. Back in 2014, Mitel offered ShoreTel $8.10 a share, but the board for ShoreTel declined the deal. The board then said that the company had been undervalued by Mitel.

With the deal, Mitel has close to doubled its revenue to $263 million. Mitel’s CEO Rich McBee said the following in a statement: “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.”

The deal must still be approved by regulators. If it is approved, the company will have 4,200 employees across the globe and 3,200 channel partners. Neither company has commented on keeping all employees or the need for layoffs once the deal is approved or how customers of ShoreTel will be serviced by Mitel.

Other Telecom Industry News

It’s been a busy stretch of months for the telecommunications industry and the news of Mitel acquiring ShoreTel is just the tip of the iceberg.

  • Avaya has filed for its second bankruptcy and plans to exit their most recent bankruptcy by the fall of 2017. The company announced early in August that it has reached a plan support agreement that will move the bankruptcy proceeding along.
  • Toshiba also announced that it has pulled its telecommunications operations out of North America and Mexico, leaving thousands of customers without support. Toshiba “deemed it necessary to wind down our Telecommunication Systems Division (TSD) business starting immediately,” according to a letter by Brian Metherell, vice president and general manager of Toshiba America Information Systems’ (TAIS) Telecommunication Systems Division (TSD). Dealers were able to submit orders up until May 22, 2017 before the company stopped accepting them.
  • Nortel was cleared to exit bankruptcy back in January of 2017 and distribute more than $7 billion to its creditors. The announcement came years after the company originally filed for bankruptcy in 2009.

The NEC has ongoing initiatives focused on stability, diverse portfolios, financial strength, marketing, business development teams and continued promotions in an effort to improve the industry as much as possible.

The telecommunications industry has so much to offer both companies and individuals. Contact Eastern American Technologies today at (718) 937-6300 to speak with an experienced member of the staff about your telecommunications project.