Mitel Networks has abandoned its hostile takeover bid for California competitor ShoreTel, it announced early Monday morning.
In a release sent before the markets opened Monday, Mitel said the refusal of ShoreTel’s board to enagage in any type of meaningful discussions with regards to an acquisition is what ultimately led to the offer being abandoned.
The Ottawa maker of communications systems for businesses said it was abandoning the bid, valued at $574 million, after ShoreTel’s board of directors unanimously rejected Mitel’s acquisition offer. Mitel had offered to purchase all of ShoreTel’s outstanding shares at a price of $8.50 each.
Mitel has been looking to consolidate its operations with some of its competitors and acquire others where it’s been able. It recently merged with Aastra, a Toronto company, in hopes of creating a new telecommunications player with $1 billion a year in annual revenues.
ShoreTel recently reported revenues of $340 million for fiscal 2014 and would have been an asset to help the company achieve its goals.
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Both firms are shifting rapidly toward cloud-based technologies, which means they are selling telecommunications as a service through a subscription rather than as a hardware sale. While ShoreTel’s overall revenues are substantially lower than Mitel‘s, a relatively bigger chunk of them are cloud-based.
Mitel never revealed how it intended to finance the takeover. At the end of June, the Kanata firm had $134.2 million cash on hand, along with long-term debt of $336 million. ShoreTel, on the other hand, had $56.1 million in cash and relatively little long-term debt.
With files from Jim Bagnall
