Better Together

Planned merger of Mitel and ShoreTel will create a stronger entity with an advanced technology strategy.

On July 27, 2017, Mitel announced that it had entered into a definitive agreement to acquire 100 percent of the outstanding shares of ShoreTel common stock in an all-cash transaction. The purchase price of $7.50 per share represents a 28 percent premium on ShoreTel’s closing share price on July 26.

If the deal goes through as expected, it will create an entity with global sales of $1.3 billion, including $263 million in revenue for cloud-based Unified-Communications-as-a-Service (UCaaS) offerings. The combined company will be the No. 2 player in the UCaaS market, representing 16 percent of the worldwide installed base. Mitel will be able to accelerate its growth in the UCaaS space, and provide the cloud-based solutions customers increasingly demand.

Organizations that have invested in ShoreTel equipment may be wondering what this deal means to their UC and collaboration strategies. The experts at IPC believe that it’s good news for customers, creating an entity with the financial strength and technology roadmap to deliver substantial value.

“We don’t expect much if anything to change in terms of ShoreTel’s technology,” said Jeff Andrews, Executive Vice President, IPC. “The ShoreTel Connect platform, which provides a single software code base and unified experience across cloud, on-premises and hybrid deployments, has been well received in the industry. We believe that Mitel will build upon ShoreTel’s technology, and leverage ShoreTel’s solutions to strengthen its ability to deliver cloud-based services to customers with existing on-premises and hybrid platforms.

Commonsense Move

The merger announcement didn’t come as much of a surprise to industry analysts. Mitel has acquired five other companies since 2013, and even made a bid for ShoreTel back in 2014. Although that offer was rejected by ShoreTel’s board, it was really only a matter of time before ShoreTel was acquired.

Furthermore, the Voice over IP (VoIP), UC and collaboration markets have been consolidating rapidly as technology has shifted from traditional PBXs to VoIP platforms to the cloud. Organizations are looking for end-to-end solutions that give them the flexibility and scale to support mobile workers and remote locations. Larger global vendors are better positioned to meet those demands.

“The communications market used to be more fragmented when all PBXs were deployed on-premises and telecom services were regionalized,” Andrews said. “Now it’s coalescing around a few players with the ability to deliver a high-quality cloud experience with state-of-the-art communication and collaboration tools. We believe that the ShoreTel and Mitel combined are well-positioned to take a leadership position in this market.”

Andrews notes that Mitel only sells through channel partners such as IPC. This provides customers with a local relationship backed by a global service provider.

“As a ShoreTel Circle of Excellence Winner and the No. 2 ShoreTel partner in the U.S., IPC has the expertise and experience to design, implement and maintain Mitel and ShoreTel solutions,” Andrews said. “In addition, Mitel has given us every assurance that it will continue to invest in and support ShoreTel’s products.”

Finding Synergies

That’s not to say that Mitel won’t look for synergies across the two companies’ product lines. The company has said that it will consolidate solutions portfolios in a way that maximizes customers’ existing investments and leverages the best capabilities of ShoreTel and Mitel offerings.

“Any customers that has deployed ShoreTel or Mitel solutions will be protected from forklift upgrades while capitalizing on the increased investments of the combined company,” said Andrews. “The two companies have complementary technology platforms, and a shared focus on cloud-based solutions and next-generation applications.”

Mitel also has a proven track record of success integrating acquired companies and sees opportunities to reduce costs by $60 million annually. Over the next two years, Mitel plans to implement supply chain efficiencies, eliminate redundancies and overlapping programs, streamline infrastructure and operations, and optimize R&D.

The combined company, which will be headquartered in Ottawa, Canada, and operate as Mitel, will have approximately 4,200 employees and 3,200 channel partners. Both Mitel and ShoreTel are committed to providing continued support and an attractive technology roadmap for both customers and partners.

“We look forward to the opportunity of becoming a Mitel partner, and offering an expanded, industry-leading portfolio of communications and collaboration solutions backed by IPC’s expertise,” Andrews said. “ShoreTel’s solutions will strengthen Mitel’s ability to provide enterprise-class solutions, whether cloud-based, on-premises or in mixed deployments. IPC’s experienced team stands ready to deliver these solutions to customers.”