Mitel has reached a deal to acquire Mavenir Systems for $560 million, a deal that will give the company an expanded set of mobile capabilities it can use to target a host of new cloud-based unified communications (UC) and rich communications services (RCS) opportunities across a mix of wireline and wireless network environments.
When the deal closes, Mavenir will become the mobile business division of Mitel, operating under the Mavenir brand. Current president and CEO of Mavenir Pardeep Kohli will join Mitel in the role of Mavenir president, reporting to Rich McBee.
An immediate benefit of the purchase for Mitel is scale in terms of customers.
By acquiring Mavenir, Mitel said it expects to expand its total addressable market by $14 billion by 2018, and be well positioned to capitalize on increasing demand for wireless 4G LTE services. The deal extends Mitel's service provider and mobile operator footprint to over 130 service providers and mobile operators, including 15 of the top 20 mobile carriers worldwide, covering 2 billion subscribers.
Some of Mavenir's clients include Verizon Communications (NYSE: VZ), a carrier that's been looking to find more ways to provide integrated wireline and wireless services for its enterprise customers.
What Mitel could also potentially do with acquiring Mavenir is extend more mobile capabilities to its traditional enterprise clients that are dealing with the growing use of mobile devices on their sites. Mavenir's capabilities could help Mitel provide a common platform to support a host of cloud-based UC services.
"We believe the combination of Mitel and Mavenir creates a powerful new value proposition for enterprises and mobile service providers, using a common IP technology layer as the foundation for convergence, growth and competitive differentiation," said Rich McBee, president and CEO of Mitel, in a release.
Under the terms of the deal, Mitel will acquire all of Mavenir's outstanding shares in a cash and stock deal. Specifically, Mavenir stockholders will get either all-cash or all-stock for each Mavenir share, with a value of $11.08 plus 68 cents of a Mitel common share, or $17.94 based on the Mitel closing price on Feb. 27.
Mitel said the acquisition will be funded using cash on hand and with proceeds from new senior secured credit facilities. The company said it has received financing commitments from BofA Merrill Lynch and Credit Suisse for $700 million in total.
Completion of the acquisition is subject to Mavenir stockholders tendering a majority of Mavenir outstanding shares, and gaining regulatory and stock exchange approvals as well as meeting other customary conditions.
This is not the only time that Mitel has gone to the acquisition well. Previously, the vendor tried twice in both October and November 2014 to acquire competitor ShoreTel. Each time ShoreTel's board of directors rejected their attempts acquire the company, saying that their bids undervalued the company and its growth prospects.
For more:
- see the release
- Reuters has this article
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