VoIP Vendors Merge in $732 Million Deal6:53 PM EST Thu. Apr. 26, 2007
Mitel Networks on Thursday unveiled plans to acquire Inter-Tel in a $732 million deal that will double the telecommunications vendor's revenue.
The combined company will have a portfolio that targets SMB and enterprise customers with a range of VoIP, unified communications, networking, management products, including communications applications such as messaging, contact center, mobility and collaboration.
The deal will take Inter-Tel, Tempe, Ariz., off the public market. It also signals the end of Mitel's plans to issue an initial public offering.
"Having rapidly achieved the next step in our long-term growth plans with this merger, we will for the near-term, withdraw Mitel from the IPO registration process," said Don Smith, CEO of Mitel, in the statement.
As a result of the acquisition, which is expected to close in the third quarter, Mitel solution providers will have access to a broad set of Inter-Tel managed services, while Inter-Tel partners stand to benefit from Mitel's broad, global reach, Smith said.
"Inter-Tel's achievements, particularly in North America, include creating successful managed service offerings that we intend to extend to Mitel's resellers and customers worldwide," Smith said. "Mitel's scalable solutions and broad geographic reach will drive growth in the large enterprise sector, complementing recent moves by Inter-Tel to expand its addressable market. We believe the merger will deliver value to customers, channel partners, employees and shareholders while making us the clear choice for new clients."
Inter-Tel on Thursday reported first-quarter earnings of $2.6 million, or 10 cents per share, down from earnings of $3.2 million, or 12 cents per share, for the same quarter a year ago. Sales for the quarter rose slightly to $109.5 million, up from $106.9 million a year ago.
Mitel has agreed to acquire Inter-Tel for $25.60 per share, for a total purchase price of approximately $723 million. The transaction is being funded by a combination of equity and debt. Francisco Partners is leading the equity portion with participation by Morgan Stanley Principal Investments, while debt funding is being arranged by Morgan Stanley on behalf of Mitel.
Both companies' boards have approved the deal, which is subject to the approval of Inter-Tel shareholders and regulatory approvals.
Shares of Inter-Tel closed down 17 cents at $23.79 Thursday prior to the announcement.