The news this week that Mitel would be acquired in a US$2-billion deal may have come as a bit of a surprise, but the Kanata-based communications firm is no stranger to big-money M&A plays in the past half decade.
Investor group Searchlight Capital Partners’ acquisition, which would see Mitel taken private once again, is not quite final, and the company’s track record with M&A shows that deals can always fall through.
Below is a brief timeline of Mitel’s notable mergers and acquisitions from the past five years, a period in which it hoped to become a consolidator in the cloud communications market.
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2013 – prairieFyre acquisition
In the first major push of CEO Rich McBee’s consolidation strategy, Mitel acquired contact centre supplier prairieFyre Software in a deal valued at $20 million. The Ottawa firm had been a supplier to Mitel before the acquisition.
The acquired firm’s CEO, Chris Courneya, would remain with Mitel for a few years and currently serves as CEO at InitLive, a fellow Wesley Clover portfolio company.
2014 – Aastra merger
Mitel’s annual revenues first crested $1.1 billion when it merged with Toronto firm Aastra Technologies in 2014.
McBee said then that the $392-million deal was an amicable merger between two firms in a market ripe for consolidation. Mitel would grow its customer base from 10 million to 60 million with the deal.
“I feel real good about it. It’s a made-in-Canada deal. It’s two great Canadian technology companies, bringing them together and making a really strong one that’s got a place on a global footprint that matters and is significant. I’m kind of proud of that,” McBee told OBJ at the time.
2014 – ShoreTel takeover bid
Mitel’s second acquisition play in 2014 was decidedly less friendly than with Aastra. Mitel offered to purchase California-based ShoreTel at a price of $540 million, but the U.S. company’s board rejected the play.
McBee expressed disappointment at the board’s refusal, with Mitel indicating at the time that the takeover offer was “far superior” to what the U.S.-based firm could achieve independently.
A month later, Mitel would sweeten the deal to roughly $574 million, but that money would ultimately be left on the table – for a time.
2015 – Mavenir adds mobile
Mitel made a move at the emerging mobile market with its $560-million acquisition of Texas-based Mavenir in 2015. The firm believed at the time that the convergence of enterprise and mobile networks would present a total addressable market of $14 billion by 2018.
“We can all see the world is going mobile and ultimately people want their mobile device, they want to be able to do everything on it,” said Mitel CFO Steve Spooner at the time. “They want business-type services on a mobile device, and that’s very much the kind of products and services that Mavenir is offering.”
2016 – Polycom and competition
Things looked good for Mitel M&A in the spring of 2016: The firm had announced plans to acquire California video technologies firm Polycom – a larger player than the Kanata-based company – in a deal valued at roughly $1.96 billion. Analysts applauded the deal at the time, crediting McBee and a strong management team with delivering on its consolidation drive.
The good tidings would not last. A competing offer from private equity firm Siris Capital, deemed a superior offer by Polycom management, would overtake Mitel’s bid. On the bright side, Mitel would receive a $60-million cancellation fee for its trouble.
2017 – Selling off Mavenir
Mitel decided in early 2017 that its investment in mobile wouldn’t pay off as hoped. The firm divested its mobile division – acquired with its $560-million purchase of Mavenir two years earlier – to Sierra Private Investments at a loss of $385 million plus equity.
McBee insisted that the mobile sell-off refocused Mitel, and analysts approved of the decision, “bad optics aside.”
2017 – ShoreTel round two
Three years after its offers were rebuffed, Mitel sealed the deal on acquiring long-time target ShoreTel. The firm made the acquisition at a price of $430 million, $110 million less than it had offered in 2014.
Analysts applauded the move, which grew Mitel by 30 per cent overnight. The firm said at the time that the move positions it as the No. 2 cloud-communications service provider in the world with $1.3 billion in annual revenues.
2018 – The hunter becomes the hunted
McBee announced in February that, after the heavy lifting of absorbing ShoreTel had finished, Mitel would put a pause on its consolidation push. Two months later, the firm announced it had been acquired.
If the deal is approved by shareholders and regulators, Mitel will return to being a privately held firm. McBee told OBJ Tuesday that this will allow the company to carry out its long-term vision without having to worry about the scrutiny of public markets.
Mitel’s co-founder Terry Matthews, who holds a 2.5 per cent stake in Mitel, also approved of the acquisition plan, alongside the firm’s board of directors.
