Mitel Networks To Acquire Aastra Technologies For C$392 Mln - Update

(RTTNews) - Mitel Networks Corp. (MITL, MNW.TO), a provider of business communications and collaboration software and services, Monday said that it has agreed to acquire Aastra Technologies Ltd. (AAH.TO), an enterprise communications provider, for C$392 million.

Mitel Networks said the acquisition will be for $6.52 in cash plus 3.6 Mitel common shares per each Aastra common share. This amounts to C$31.96 per Aastra common share, resulting in a total value on closing to Aastra shareholders of C$392 million.

The per share price represents a 20.9 percent premium to the 30-day volume weighted average price of Aastra shares as of November 8, the company noted. The companies anticipate to complete the transaction in the first quarter of 2014, subject to conditions.

The deal, which has been unanimously approved by the Boards of Directors of both companies, is projected to create a billion dollar company in an $18 billion business communications market, which prepares to migrate to software-based cloud services.

Following the acquisition, Mitel President and Chief Executive Officer Richard McBee will continue to lead the new firm, and Chief Financial Officer Steve Spooner will report to him. Aastra's Co-CEO Francis Shen will assume the position of chief strategy officer, while Co-CEO Tony Shen will assume the position of chief operating officer.

Mitel added that it will increase the number of directors on its Board from eight to nine. Mitel Board's two existing members will step down, while Aastra will appoint three new board nominees.

The combination is projected to result in combined revenue for the new company of approximately $1.1 billion for the trailing four quarters.

The company also expects to have approximately $45 million of run rate synergies within two years, driven by supply chain optimization, facilities consolidation and economies of scale.

Following the deal closure, Aastra shareholders will own approximately 43 percent of the combined company.

Mitel expects to carry out the deal by way of a court-approved plan of arrangement. It will require the approval of at least 66 2/3 percent of the Aastra votes. Francis Shen and Tony Shen, who together control approximately 14 percent of Aastra, have agreed to vote in favor of the deal. Further, Francisco Partners and Terry Matthews, who together control approximately 63 percent of the firm's stake, have both signed voting support agreements.

Mitel said it intends to finance the cash portion of the deal with cash on hand from the combined businesses and to refinance its existing credit facilities. The company has received term loan and revolving credit facility commitments from Jefferies Finance LLC and The Toronto-Dominion Bank of up to C$405 million.

In the transaction, Jefferies LLC is acting as financial advisor to Mitel, while TD Securities Inc. is acting as financial advisor to Aastra.

Mitel further said its second quarter results for the period ended October 31 will be reported in early December.

Mitel shares closed Friday's trading at C$6.65, down C$0.04 or 0.60 percent.

Aastra shares closed at C$28.23.