Investment firm Searchlight Capital Partners is to acquire unified communications (UC) supplier Mitel for $2bn (£1.4bn), or $11.15 per common share, and will delist it from the Nasdaq and Toronto stock markets in an attempt to give it more freedom and flexibility to switch to a cloud-first strategy.
The deal, which represents a 24% premium over the weighted average price for the three months to 23 April 2018, was unanimously agreed upon by the directors of the Canadian comms firm, which was set up as a lawnmower import business (Mike and Terry’s Lawnmowers) by British-born Mike Cowpland and Terry Matthews in the early 1970s – the two entrepreneurs are said to have turned their attention to telecoms equipment after their first shipment of product was lost at sea.
Mitel has subsequently become one of the leading businesses in the UC space, particularly in regard to small and medium-sized enterprise (SME) customers, and in recent years has come to shape the UC market – it bought competitor ShoreTel in 2017 following a tug-of-love acquisition battle dating back to 2014.
Since then, it has embarked on a major revamp of its product lines, and set out its desire to shift its business towards cloud-based communications, and address the perception of it as “an old, stodgy PBX company”, according to CEO Rich McBee.
In a December 2017 interview with Computer Weekly, McBee said that while selling cloud-based unified communications as a service (UCaaS) was not in and of itself a new concept, it enabled Mitel to begin to address other aspects of digital transformation within its customers.
“Once you’ve got them in the cloud, the next stage is selling them applications that help them digitally transform their company,” he said. “So you start to see things like our secure collaboration products for emergency first responders or connected guest capabilities for the hospitality sector.
“We spend a lot of time looking at vertical applications, taking a very specific horizontal capability and making it super specific to what an industry cares about – how they want to see their data, how they want to collaborate and even their work environment.”
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Matthews, who remains involved with Mitel as chairman, reiterated this point, saying: “We believe this transaction will provide Mitel with additional flexibility as a private company to pursue the company’s move-to-the-cloud strategy.
“Mitel has succeeded for 45 years because of persistent innovation and relentless focus on delivering shareholder value,” he said.
The acquisition – which is not subject to any financing conditions – is expected to close, subject to compliance, in the second half of 2018. The agreement with Searchlight does, however, include a 45-day “go shop” period that allows Mitel to actively solicit, evaluate and conduct negotiations with anybody who may make it a better offer.