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Mitel’s Acquisition Appetite Grows After Their ShoreTel Buy

Mitel reveals they’re still on the prowl for new purchases

If you thought that Mitel’s recent purchase of ShoreTel was enough to satisfy their hunger for investment opportunities, then you might want to think again. The brand announced that they’re currently on the lookout for new takeover targets after the ShoreTel purchase ended on the 25th of September.

Mitel FeaturedThis comes just after Mitel recorded a net loss of $26.8 million for their third quarter, compared to a recorded profit of $25.1 million in 2016. Of course, last year’s earnings were partially boosted by a one-time transaction cancellation fee that awarded $60 million to the company after its plan to purchase Polycom was cancelled. This year, Mitel is spending a lot of money on potential investments for the future, and besides the $530 million they shelled out on the ShoreTel purchase, the brand also had to deal with restructuring costs too.




According to Steve Spooner, the Mitel CFO, the company had to cut 200 positions to help get it back on track after the new acquisition. Adjusted EBITDA currently places Mitel’s net income at a profit of around $20.2 million, compared to $15 million last year.

Gathering Speed for the Future

Rich McBee, President & CEO, Mitel
Rich McBee, President & CEO, Mitel

Mitel’s desire for smaller acquisitions is no-doubt part of its plan to boost recurring revenue to more than 50% by the time we reach 2020. According to CEO Rich McBee, the company is pushing forward to the future, and they’re not looking back.

Of course, the more Mitel can take on new acquisition opportunities in the year ahead, the more likely it is that the brand will be able to unseat RingCentral from their place at the top of the UC market podium. Backed by Elliot Management, Mitel will be taking advantage of the opportunities that already exist in the marketplace for new consolidation and collaboration. According to McBee, the brand has all the capital it needs to start making some strategic plays. At the end of the third quarter, the cash-in-hand and equivalents for the company equaled $55.4 million.

Mitel’s Influence Continues to Grow

It seems that Mitel is growing to be an increasingly powerful force in the UC industry. Towards the end of the third quarter, the firm accomplished a milestone of one million recurring seats in their cloud infrastructure. That’s a huge jump upwards from their 665,000 seats reported at the close of the previous quarter.

During a phone interview, McBee noted that an annual outlook evaluation conducted by the firm showed that the cloud-based communications market was currently experiencing a growth of 20% year-over-year, while on-premises installations had fallen by 6%. Mitel is now looking for ways to take advantage of this changing marketplace, as they transform from an on-site company, into a cloud business with on-site strategies.

While Mitel is keen to highlight that on-premises solutions will continue to play a role in their portfolio in the coming years, McBee suggested that the focus has moved from legacy technology to cloud adoption this year. Mitel believes that the best way to stay competitive today is to offer a hybrid approach that gives customers the chance to make the best of both worlds.

As the market continues to change, Mitel is pushing themselves into a position that should allow them to make the most of the consolidation, and migration happening with companies around the world. We’re excited to see which acquisitions come next in the company’s game plan.

 

2 Comments

  1. Rob Scott Rob Scott December 7, 2017
  2. Bosco December 14, 2017

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Written by Rebekah Carter

Rebekah Carter

Hi I'm Rebekah, I have an unwavering passion for the technology sector, and I regularly stay up to date with the latest in UC and Cloud