ShoreTel Board to Stockholders: Don’t Act on Mitel’s Revised Proposal
ShoreTel (SHOR) this week confirmed that Mitel Networks (MITL) has revised its proposal to acquire all outstanding common shares of ShoreTel.
Mitel’s new proposal is to acquire all outstanding common shares of ShoreTel for $8.50 per share, which consists of $8.10 per share in cash plus 40 cents per share in Mitel common stock.
The ShoreTel board of directors, however, is advising stockholders not to act on Mitel’s most recent proposal at this time and will review the proposal to determine the course of action that it believes “is in the best interest of the company’s stockholders.”
Mitel CEO Richard McBee this week said he believes Mitel is offering ShoreTel “a compelling opportunity” that ultimately could benefit both companies.
“In addition to the obvious benefit of an immediate and significant premium for ShoreTel shareholders, a combination of our two companies would create far superior value than could reasonably be obtained by ShoreTel as a standalone entity,” McBee said in a prepared statement.
Mitel noted its most recent proposal will remain open until 5:00 p.m. ET on Nov. 20.
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The ShoreTel board last month unanimously rejected Mitel’s previous unsolicited proposal to acquire all outstanding common shares of ShoreTel at a price of $8.10 per share in cash.
ShoreTel board members said they concluded that the previous proposal significantly undervalued ShoreTel and its strong prospects for continued growth and value creation.
“We believe Mitel’s proposal is financially inadequate [and] is an opportunistic attempt to acquire ShoreTel’s assets,” Chuck Kissner, chair of ShoreTel’s board, said in a prepared statement on Oct. 27.
Why would Mitel want to acquire ShoreTel?
McBee last month pointed out that Mitel recently has undergone a “massive transformation,” and a potential ShoreTel acquisition could further accelerate his company’s growth.
A Mitel spokesperson told Talkin’ Cloud last month that his company is focused on “momentum and growth” over the next 18 months and is actively searching for ways to better support its customers as well.
“We have strongly aligned our business to our customers, putting them at the center of everything we do,” the spokesperson said. “User experience is also important to our brand promise, and we are working to ensure that we provide the solutions and services that help our customers succeed.”
Both Mitel and ShoreTel have watched their revenues increase over the past few months.
Mitel recorded $272.4 million in revenue during the third quarter of 2014, up from $135.0 million in revenue during the same time frame last year.
ShoreTel, meanwhile, earned $90.4 million in revenue in the first quarter of fiscal 2015, which represented a 7 percent year-over-year increase.
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