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    Mitel Withdraws $574 Million Proposal for ShoreTel

    By
    Jeff Burt
    -
    November 17, 2014
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      Mitel is withdrawing its $574 million bid for rival ShoreTel, with officials in a brief statement blaming the decision on the refusal of ShoreTel directors to discuss the idea of a sale.

      Mitel officials have been pursuing a deal for ShoreTel for more than a month. Their Nov. 17 announcement comes five days after ShoreTel’s board of directors rejected an enhanced offer from Mitel, calling the proposal “highly inadequate.”

      In letters to ShoreTel’s directors and executives, Mitel CEO Richard McBee expressed frustration with the refusal of the ShoreTel board to engage with his company at any level beyond rejecting the two offers. Mitel initially had offered $540 million for ShoreTel, then increased the bid after the initial rejection.

      In an interview with Bloomberg, McBee had indicated that he would consider a hostile bid if ShoreTel continued to refuse to negotiate. In addition, in a Nov. 10 letter to the ShoreTel board and President and CEO Don Joos, McBee said that he and other Mitel executives had spoken to several large ShoreTel shareholders, and “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.”

      Mitel under McBee has been aggressive in growing its unified communications (UC) capabilities through in-house development and acquisitions. The largest deal came last year, when Mitel bought Aastra Technologies for $392 million, a move that doubled Mitel’s size and made it a $1 billion company.

      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.

      Both Mitel and ShoreTel have grown their UC cloud portfolios, and ShoreTel next year is scheduled to launch a common platform for both its on-premises and cloud-based offerings. McBee has said in letters to ShoreTel directors and executives that the UC space will continue to consolidate, and that he intends to ensure that Mitel is one of the vendors that does the consolidating.

      However, Zeus Kerravala, principal analyst with ZK Research, wrote in a post on the No Jitter blog site that it was ShoreTel’s upcoming common platform that was real driver behind Mitel’s ambitions, not industry consolidation.

      “To me, this is the value that ShoreTel would bring Mitel,” Kerravala wrote. “The single platform makes shifting to a hybrid model simple, it makes application integration easier, and it should enable a better mobile experience.”

      Jeff Burt
      Jeffrey Burt has been with eWEEK since 2000, covering an array of areas that includes servers, networking, PCs, processors, converged infrastructure, unified communications and the Internet of things.

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