Mitel sales boss on why ShoreTel changed its tune on selling up
Having rebuffed a $8.50-a-share offer from Mitel in 2014, ShoreTel reached a $7.50-a-share deal with its rival last week, a development its global sales chief has attributed to the changing economics of competing in UC
ShoreTel's sale to Mitel is a reflection of a unified communications market that has reached a tipping point, where scale and R&D resources have become essential in order to compete.
That's the view of the executive vice president of global sales at Mitel Todd Abbott, who claims that ShoreTel's ability to compete in the unified communications (UC) market has severely diminished since Mitel last tried to buy the comms vendor three years ago.
Mitel first courted ShoreTel as an M&A target in October 2014, but saw its $8.10-a-share offer rejected, with the telecoms vendor claiming at the time that the proposal "significantly undervalues" the firm.
ShoreTel then snubbed a second takeover approach the following November, this time at a higher $8.50 a share, describing the valuation as "highly inadequate".
But now it seems the comms vendor has finally won over the object of its continued affections, with ShoreTel accepting a significantly lower offer of $7.50 a share from Mitel yesterday.
Abbott told CRN sister publication Channelnomics Europe that ShoreTel's smaller size and pool of R&D resources when compared with its UC rivals means it is in a worse position to compete than when it rejected Mitel's M&A offer three years ago.
"The UC and telephony market has been very slow to consolidate. There are still many, many players and it is very fragmented. It has been so slow because it is pretty sticky - enterprises just don't like to change that infrastructure. But as a result, we have had a lot of companies out there that have been living off of their maintenance streams, and have not been innovating and are starting to realise that it is going to take a certain amount of scale in order to compete," said Abbott.
"So you are starting to see the consolidation of this industry pick up - you saw us pick up Toshiba, now you have seen ShoreTel look at their size and their capabilities to compete in a different way today than they did three years ago."