The number of players in the Unified Communications-as-a-Service (UCaaS) market has just gotten a little bit smaller. This morning Mitel announced that it
The number of players in the Unified Communications-as-a-Service (UCaaS) market has just gotten a little bit smaller.
This morning Mitel announced that it has entered into a definitive merger agreement pursuant where it will acquire 100 per cent of the outstanding shares of ShoreTel common stock. This is an all-cash transaction at $7.50 per share, with a total equity value of about $530 million and a total enterprise value of about $430 million. The transaction is expected to close in the third quarter of 2017.
The move shores up Mitel’s enterprise UCaaS capabilities as the telecommunications company continues to shift towards a cloud dominated market with digital transformation on the mind. Specifically, ShoreTel’s enterprise solutions will help Mitel’s customers become cloud-enabled with their existing on-premises or mixed deployments. This provides a pretty significant boost to the Ottawa-based Mitel. According to the company, with the acquisition of ShoreTel, it has become the number two player in the UCaaS market.
“We are seeing a fundamental shift in the market, ” said Mitel CEO, Rich McBee in an investors call this morning. “With the acquisition of ShoreTel we are accelerating our move-to-the-cloud strategy. We will be well placed in order to meet the digital transformation demands from our customers for cloud-based solutions globally.”
Mitel highlights that the combined sales of the two companies totaled $1.3 billion in the 12 months before March 31,2017. The acquisition is expected to increase Mitel’s total recurring revenue to 39 per cent of its total revenue, and double the company’s UCaaS revenue to $263 million. Mitel expects to be accretive to non-GAAP EPS in the first year following the closing of the acquisition.
Combined, Mitel will now have roughly 3,200 channel partners with the addition of ShoreTel. This announcement comes just a few weeks after Mitel announced that it was acquiring Toshiba’s unified communications business.
