Mitel Networks, a provider of internet telephony and video-conferencing services, will buy smaller rival Aastra Technologies for $374 million.
As per the deal, Mitel will pay Aastra shareholders $6.52 in cash plus 3.6 Mitel shares per Aastra share, or C$31.96 per share.
Mitel will benefit from Aastra’s financial structure, complementary portfolios, geographic reach, and large installed-base.
The strategic decision is aimed at building scope and scale in a consolidating market. The combined entity will be a $1 billion company with one of the largest global footprints in the industry, #1 market share in Western Europe, a $100 million cloud business, and a global installed customer base ready for upgrade as the $18 billion business communications market prepares to migrate to software-based cloud services.
The combined company will be headquartered in Ottawa, Canada and will operate under the name Mitel while continuing to leverage Aastra’s brand recognition in select European markets.
The executive management team will continue to be led by current Mitel President and Chief Executive Officer, Richard McBee.
Aastra’s co-CEOs, Francis Shen, who will assume the position of chief strategy officer, and Tony Shen, who will assume the position of chief operating officer.
Mitel and Aastra will significantly expand their organizational scale and scope with a combined market presence of over 60 million end users in more than 100 countries and a global network of more than 2,500 channel partners.
With minimal channel overlap between the two organizations, the combination significantly expands the addressable market opportunities of existing partners, equipping them to sell into the small and mid-size business market in local or regional geographic opportunities as well as large and lucrative global enterprise accounts.
With annual sales of $1.1 billion, the combined entity will have a research and development budget of approximately $100 million.
Mitel is expecting savings of approximately $45 million within two years, driven by supply chain optimization, facilities consolidation and economies of scale.
Aastra shareholders, who will own approximately 43 percent of the combined company, are expected to benefit from potential, driven by the combined company’s strategic position and achievement of full run-rate synergies.
