**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q3 2014.**
The new proposal, ramped up to $8.50 per share from the first offer of $8.10 per share, represents a 31 percent premium over ShoreTel’s Oct. 17 stock price and a 38 percent premium to ShoreTel’s enterprise value, Mitel said. The transaction would consist of $8.10 per share in cash and 40 cents per share in Mitel common shares. ShoreTel stock was trading at $8.18 a few minutes after noon Eastern on Monday.
The latest offer will stay open until Nov. 20.
In a letter to ShoreTel’s board, Richard McBee, president and CEO of Mitel, said combining the two companies “offers a compelling opportunity to add sustained value to both organizations, and would solidify our combined leadership position in a highly competitive and rapidly consolidating market.”
Besides, he noted, “ShoreTel is challenged to deliver meaningful profitability while executing on its strategy.”
He said this after starting the letter this way:
“I am disappointed that your board of directors has rejected our proposal, and further disappointed by the lack of engagement and your refusal to even discuss a potential transaction on behalf of ShoreTel’s shareholders.”
And, he added, Mitel has been talking with ShoreTel’s largest stockholders.
“They support the logic and understand the benefits of a combination of our two companies, indicating an interest in participating in the upside of a combined organization,” McBee wrote.
That’s based on Mitel’s research that shows ShoreTel faces “significant challenges” as a standalone company, he said.
McBee appears most keen on growing Mitel’s cloud business, thereby increasing the recurring revenue flowing through the company to $450 million annually, thanks in part to ShoreTel, which has the ShoreTel Sky division. McBee also wants to achieve “operational efficiency.” Here’s an excerpt from his letter:
“Currently, based on Synergy Research’s latest ranking, ShoreTel is the No. 5 player in the cloud based telephony market, with the competition continuing to extend their lead. Combining with Mitel, the No. 4 player, would create the clear No. 1 global market share leader based on the total number of installed cloud seats, with over $45 million of recurring cloud revenue per quarter. The combined organization would have the second-largest cloud recurring revenue customer base in the world with over 400,000 installed recurring cloud seats, including 245,000 from Mitel and 160,500 from ShoreTel. In addition to the public cloud position, Mitel brings over 600,000 private cloud seats, growing over 70 percent year-over-year.”
McBee ended the letter by noting that Mitel raised its offer “without having had the benefit of any additional due diligence. 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.”
ShoreTel had yet to respond to Mitel.
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October 15 2019 @ 16:33:31 UTC