Investment Group Led By Searchlight Capital Plans To Acquire Mitel For $2 Billion

Canadian unified communications vendor Mitel has agreed to be acquired by an investment group led by private equity firm Searchlight Capital Partners in a $2 billion deal that will take the company private.

Mitel's board of directors voted in favor of Searchlight Capital's offer and recommended that shareholders approve the deal, the company said in a statement. At $2 billion, the price tag represents about $11.15 a share for shareholders, a considerable 24 percent premium over the stock's 90-day average price, the company said. It is also nearly 10 percent above the stock's Monday closing price.

The cash deal for Mitel would put another legacy technology business in Searchlight Capital's portfolio. The firm also has a stake in Rackspace and was reported to be a bidder for BroadSoft, which was acquired earlier this year by Cisco Systems.

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The acquisition would give Mitel the ability to invest long term and accelerate its transition to a cloud-based business model, Joe Rittenhouse, president of business development at Converged Technology Professionals, a Crystal Lake, Ill., solution provider that works with Mitel, said in an email to CRN.

"Searchlight knows the cloud market, and they've wanted to make a big splash in it," Rittenhouse said. "This is a good thing for the customers we serve and channel partners Mitel works with. Operationally, the strategy and the team does not change."

"There will be no changes to the channel program as part of this deal. Searchlight has thoroughly reviewed the Mitel plan and they are investing in the company to execute its stated plan to lead the UCaaS market transition," Todd Abbott, Mitel executive vice president of global sales and service, said in a statement. "All recent Mitel channel program and promotion announcements have been created with the stated intent to enable channels to migrate customers to cloud-based solutions as quickly and effectively as possible."

Mitel is part of the enterprise communications old guard, competing primarily in IP telephony with industry giants like Cisco and Avaya. In recent years, though, it has begun an effort to reposition itself in Unified Communications as a Service as the market shifts toward more mobile, flexible platforms delivered in the cloud as a service.

That effort led Mitel to acquire ShoreTel late last year for about $430 million.

The Searchlight Capital deal is expected to close in the second half of the year, according to Mitel.