Mitel announces agreement to acquire ShoreTel for $7.50 per share in cash
Mitel (MITL) and ShoreTel (SHOR) announced that they have entered into a definitive merger agreement pursuant to which Mitel will acquire 100% of the outstanding shares of ShoreTel common stock in an all-cash transaction at a price of $7.50 per share, or a total equity value of approximately $530 million and a total enterprise value of approximately $430 million.
ShoreTel, Inc. provides business communication solutions for small and medium sized businesses. The company offers integrated voice, video, data, and mobile applications based on Internet protocol technologies. It offers various solutions, such as ShoreTel Voice Switches; ShoreTel Service Appliances for messaging, conferencing, and collaboration applications
The purchase price represents a 28% premium to ShoreTel’s closing share price on July 26, 2017.
The combined company will be headquartered in Ottawa, Canada, and will operate as Mitel. Rich McBee, Mitel’s Chief Executive Officer, will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role.
Financial highlights of the transaction include: Combined sales of $1.3 billion; Increases Mitel’s total recurring revenue to 39% of total revenue; More than doubles Mitel’s UCaaS revenue to $263 million; Significant synergy opportunity targeted at $60M in annual run rate spend expected to be achieved over two years; Expected to be accretive to non-GAAP EPS in the first year.
Mitel intends to finance the consideration for the acquisition and associated transaction expenses using a combination of cash on hand from the combined business, drawings on its existing revolving credit facility and proceeds from a new fully underwritten $300 million term loan maturing in 2023.
The transaction is expected to be completed in the third quarter of 2017, subject to ShoreTel stockholders having tendered shares representing more than 50% of the outstanding shares of ShoreTel common stock, certain regulatory approvals having been obtained and other customary conditions to the tender offer having been satisfied.
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