Mitel has agreed to buy ShoreTel for USD 7.50 per share in cash, translating into a total equity value of USD 530 million and a total enterprise value of USD 430 million. The purchase price represents a 28 percent premium to ShoreTel's closing share price on 26 July, before the offer was made. Mitel said the acquisition will accelerate its move to the high-growth Unified Communications as a Service market, propelling it into second place worldwide, and more than doubling Mitel UCaaS revenue to USD 263 million.
The combined company will be headquartered in Ottawa, Canada, and operate as Mitel. It will be led by Mitel CEO Rich McBee, with Mitel CFO Steve Spooner continuing in his role.The new company will have 3,200 channel partners and a portfolio of communications and collaboration solutions. Upon closing, the company will have a global workforce of 4,200 employees and combined sales of USD 1.3 billion. The transaction is expected to add to adjusted earnings per share in the first year, and to deliver USD 60 million in expected synergies over two years.
The transaction will not require the approval of ShoreTel, which has recommended stockholders tender their shares. ShoreTel director and executive officers have agreed to sell their shares to Mitel. Mitel intends to finance the deal using cash on ha, existing credit and from a new fully underwritten USD 300 million term loan set to mature in 2023. BMO Capital Markets will lead the new term loan facility with Citizens Bank, HSBC Bank Canada and Canadian Imperial Bank of Commerce, serving as joint lead arrangers and joint bookrunners.
The transaction is expected to complete in the third quarter, subject to more than half of ShoreTel stockholders getting tendered, certain regulatory approvals and other customary conditions.
ShoreTel reported third quarter results in April, with revenues rising almost 3 percent to USD 87.7 million and the net loss narrowing to USD 2.9 million.
