ShoreTel Rejects Enhanced Mitel Bid
ShoreTel has again rejected Mitel's bid to buy the unified communications vendor, calling the $574 million offer "highly inadequate."
The unanimous decision Nov. 12 by ShoreTel's board of directors came two days after Mitel executives increased their initial unsolicited offer of $540 million, with Mitel CEO Richard McBee saying a combined company could be a significant player in a consolidating unified communications (UC) market. ShoreTel rejected Mitel's initial offer Oct. 27.
However, ShoreTel directors said Mitel's new offer undervalues the company. Shareholders would be better served by ShoreTel's strategic plan than by being bought by Mitel, according to President and CEO Don Joos.
"ShoreTel's focus on successfully executing its strategy has been driving improved financial performance and value creation, as evidenced by our recent financial results, including our fiscal first quarter 2015 earnings report," Joos said in a statement.
In October, ShoreTel reported record revenues of $90.4 million for its fiscal 2015 first quarter, a 7 percent increase from the same period last year.
"We continue to believe that Mitel's highly inadequate proposal does not reflect the value inherent in ShoreTel's business, nor does it reflect ShoreTel's compelling prospects for long-term growth and value creation," ShoreTel Chairman Chuck Kissner said in a statement.
Mitel's McBee has been aggressive over the past couple of years in buying companies to build out his firm's capabilities. Most recently, Mitel last year bought Aastra Technologies for $392 million. The CEO has noted that the UC space will continue to consolidate, and said that Mitel will be a buyer. ShoreTel officials have pushed back, noting the improving financial numbers and the plan to launch a common platform for its on-premises and cloud-based UC solutions in April.
In a letter to ShoreTel directors Nov. 10, McBee lamented ShoreTel's decision not to negotiate.
"While you have decided not to engage with us directly, we have had discussions with a number of your largest shareholders regarding our acquisition proposal," he wrote. "They support the logic and understand the benefits of a combination of our two companies, indicating an interest in participating in the upside of a combined organization."
In an interview with Bloomberg earlier this month, McBee also said that he had not ruled out a hostile bid for ShoreTel should the directors continue to shun Mitel's advances.