Mitel Networks announced Monday it has offered to buy ShoreTel Inc. for about $540 million in cash but the proposal has been rejected by the California-based company's board.
“We are disappointed that the ShoreTel board has rejected our proposal and refused to engage with us,” Mitel CEO Richard McBee said in a statement.
The Ottawa-based communications company said it remains open to further discussions with ShoreTel (Nasdaq:SHOR) and will leave the offer on the table until Nov. 20.
"The business communications market is rapidly consolidating and Mitel has clearly stated that we intend to be a consolidator in this market,” Mr. McBee said.
Earlier this year, Mitel completed at $392-million cash and stock deal for Aastra Technologies, leading to record-breaking revenues in the company’s last earnings report.
Mitel (TSX:MNW) said ShoreTel has a complementary U.S.-based business and that the takeover offer is "far superior" to what it can expect to achieve on its own.
Mitel said its offer of $8.10 per share is 24 per cent above ShoreTel's closing stock price of US$6.51 on Friday.
In a letter Mr. McBee sent to ShoreTel’s chairman of the board Monday, he wrote he was disappointed with the board’s refusal to “engage with us.”
“We believe that a transaction between our two companies would be well received by your
shareholders, and we are committed to providing them with an opportunity to express their views on our proposal,” he wrote.
As he wrote in a previous letter, Mr. McBee once again pointed to Mitel’s track record of successfully completing deals, said Mitel could secure the deal with cash from its balance sheets and access to capital markets, and added it was ready to meet with ShoreTel immediately to come to term on a deal.
ShoreTel stock opened Monday at US$7.65 and was trading at US$7.94 by mid afternoon.
Mitel's shares opened at C$9.44 on the Toronto Stock Exchange, dropping to C$9.18 by mid-afternoon.
-with files from the Canadian Press