Mitel raises its ShoreTel offer to $8.50 per share in cash, stock

Mitel has taken another stab at acquiring competitor ShoreTel, raising the price of its acquisition bid to $8.50 per share in cash in stock, a proposal that represents an overall value of about $574 million.

The company said the new proposal will remain open until 5 p.m. Eastern time on Nov. 20, 2014.

As part of the new proposed deal, Mitel says it proposes to deliver ShoreTel shareholders $8.10 per share in cash and $.40 per share in Mitel common shares, or approximately 2.72 million shares.

Mitel said its new offer represents a 31 percent premium to ShoreTel's unaffected stock price on Oct. 17, 2014, and a 38 percent premium to ShoreTel's enterprise value.

The new acquisition proposal was provided to ShoreTel's board today in a letter from Richard McBee, Mitel's president and CEO.

McBee wrote in the letter that conversations were held with a number of ShoreTel's shareholders who said a combined company could deliver on three main "value drivers," including cloud growth, recurring revenue and operational efficiency.

McBee wrote in the letter that by combining Mitel and ShoreTel into one company, they would be able to create a rapidly growing cloud business with No. 1 market share by revenue and No. 2 market share by recurring cloud seats.

"Currently, based on Synergy Research's latest ranking, ShoreTel is the #5 player in the cloud based telephony market, with the competition continuing to extend their lead," wrote McBee. "Combining with Mitel, the #4 player, would create the clear #1 global market share leader based on the total number of installed cloud seats, with over $45 million of recurring cloud revenue per quarter."

As a combined company, ShoreTel said they would have over "400,000 installed recurring cloud seats, including 245,000 from Mitel and 160,500 from ShoreTel." Besides having a strong amount of public cloud clients, Mitel would bring "600,000 private cloud seats, growing over 70% YoY."

In late October, ShoreTel's board of directors rejected Mitel Networks' $540 million unsolicited bid to acquire the company, saying that it undervalues the company and its growth prospects.

For more:
- see the release

Related articles:
ShoreTel's board rejects Mitel's $540M acquisition bid
Mitel offers $540M for ShoreTel as part of U.S. expansion effort
Frontier, Mitel move Illinois Wesleyan University into the cloud

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