ShoreTel yesterday announced that they have an agreement for Mitel to acquire their shares for $7.50 per share in cash, giving a total purchase price of $530 million. That represents a 28% premium to ShoreTel’s closing share price on Wednesday.
Now usually the customers of an acquired firm might get nervous. They worry that new products and services will be imposed on them and their current products lose support. In the case of ShoreTel customers there are four good reasons not to worry and here’s why.
1. It’s About ShoreTel Connect
Mitel say it is all about the UCaaS (Unified Communications as a Service) or Cloud market. Mitel says it intends to ‘leverage ShoreTel’s extensive cloud portfolio and customer base’ and that it ‘more than doubles Mitel’s UCaaS revenue to $263 million’. In other words, ShoreTel’s current UCaaS sales are greater than Mitel’s. ShoreTel’s and Mitel’s customer bases are like those of most vendors – 90% On Premise and 10% Cloud. It is just that the latter is growing faster these days. But the difference is this – ShoreTel’s OnPrem solution (Connect) is their Cloud solution – and it can do Hybrid too, so you can mix, match and move between the two. So, if Mitel get this larger Cloud base and also get a much larger OnPrem base which can easily move to Cloud then it doesn’t make sense to try to migrate them to current Mitel solutions.
2. It’s About ShoreTel Connect in Enterprise Customers
Mitel also says “For enterprise customers, ShoreTel’s solutions will strengthen Mitel’s ability to cloud-enable customers with existing premise or mixed estate deployments …” so they rightly see ShoreTel Connect as more scalable than the Mitel products and they also buy into the Hybrid model.
3. The Support Continues
Mitel specifically states that “Mitel and ShoreTel are committed to providing continued support and an attractive path forward for all customers and partners – cloud and premise.” There are no known plans to discontinue any customer support. Don Joos, CEO of ShoreTel said “… no customer is left behind or will have to abandon what they already have to cloud-enable their organization.”
4. It Makes Them #2
Mitel says “The combined company will be the #2 player in the UCaaS market, creating a supplier with the scale and technical capabilities to enable customers with new cloud-based solutions and applications. The additional size, scale and financial foundation of the combined company will ensure the continued support of the solutions our customers desire.”
So, dear customers, sleep easy in your bed (and migrate to Connect if you haven’t already done so).
It is the 3,200 channel partners and 4,200 employees of the combined company that must work hard use this opportunity to exploit the gap in the market left by Avaya’s bankruptcy.
If you have further questions, please respond to me here or by whatever method you prefer.