Mitel deal 'good for Ottawa,' CEO says

As the dust settles on the biggest acquisition the city’s tech sector has seen in years, Mitel CEO Rich McBee said Monday the company will look to find ways to expand its Ottawa centre of excellence even as it seeks to eliminate some jobs duplicated by its acquisition of Polycom.

Mitel announced Friday it was acquiring the California-based video technology producer for about $500 million in cash and $1.5 billion in stock (all terms U.S.). If approved by regulatory bodies and shareholders of both firms, the deal would create a company with 7,700 employees and $2.5 billion in annual revenues.

Mr. McBee, who will remain at the company’s helm, told OBJ that while it was too early to tell if there will be cuts to Mitel’s local workforce, he doesn’t foresee any major changes.

“Ottawa continues to be a hotbed of technology and innovation. I think that if we actually get our hands under the covers a little bit further, I think it will be good for Ottawa,” he said.

Some of the integration will focus on concentrating centres of excellence, but Mitel’s Ottawa employees will also benefit from the firm’s recently announced 5G initiative that includes a collaboration with DragonWave, Mr. McBee said.

“That’s an opportunity for Ottawa to be back into next-generation mobile capabilities in a big way,” he said.

Mr. McBee said there is always job duplication when two large public companies join forces, and Mitel CFO Steve Spooner will be in charge of integrating the two labour pools.

“We take the best talent for the job,” Mr. McBee said.

The Polycom acquisition, which is expected to close in the third quarter, adds videoconferencing technology to Mitel’s stable of products, meaning the firm now has “the four corners of the sandbox,” Mr. McBee said. The company started out manufacturing telecommunications hardware before adding cloud and mobile offerings.

“We have all the capabilities we need to be competitive as a global company,” he said.

The latest acquisition would be Mitel’s sixth since Mr. McBee took over as chief executive five years ago, following high-profile deals such as its absorption of Toronto’s Aastra Technologies and Mavenir of Texas. He said the firm’s strategy to consolidate the market has not changed, adding the company is in no hurry to make its next deal.

“This is a big cookie,” he said. “We’ll be chewing on it for a while.”

Reports that Elliott Management, a shareholder in both companies, had been urging an acquisition are true, Mr. McBee said. But he stressed the activist shareholder did not instigate the proceedings.

Elliott officials met with Mitel executives in October, he said, but the company “had already been in discussions since July. It was kind of a validation of our strategy.”