Canadian merger to form bigger player in business communications

Mitel will acquire Aastra for about $374 million to gain scale in unified communications

Size matters in the unified communications business, according to Mitel Networks and Aastra Technologies, two Canadian vendors that plan to merge early next year.

Mitel will pay about $392 million Canadian (US$374 million) for all of Aastra's outstanding shares under a deal approved by both boards of directors, the companies announced Monday. The transaction is subject to regulatory and other approvals and is expected to close in the first quarter of next year.

Business communication and collaboration have expanded beyond dedicated PBXes (private branch exchanges) and room-based videoconferencing systems to include platforms that can reach mobile users through software and cloud services. Large competitors have consolidated and formed partnerships in recent years, with Cisco Systems buying video specialist Tandberg and Logitech acquiring LifeSize, among other deals.

"We believe that small competitors with narrow focus and limited global reach will quickly be marginalized," Mitel President and CEO Richard McBee said in a press release. The companies were also motivated by a mass migration to cloud-based services, he said.

Both companies sell a range of products for messaging, voice and video calling and other forms of collaboration. Aastra has complementary products and will bring Mitel a large installed base and greater geographic reach, the companies said. They said the merger would produce a company with more than US$1 billion in annual revenue, a $100 million cloud business, and more than 60 million end users in more than 100 countries. The company would expand aggressively in the U.S. enterprise cloud business, they said.

The merged company, to be based on Ottawa, would be called Mitel but keep using the Aastra brand in some European markets. McBee would lead the merged company, with Aastra's co-CEOs Francis Shen and Tony Shen becoming chief strategy officer and chief operating officer, the companies said.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Tags Mergers and acquisitionsbusiness issuesNetworkingMitel NetworksAastra Technologies

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Stephen Lawson

IDG News Service
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