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Mitel & Aastra Announce Plan to Merge

Richard McBee of Mitel

One upon a time there used to be three major players in the phone system market that were base in Canada. Today however, after the demise and break up of Nortel in 2009, news that Mitel is to take over Aastra leaves just one – Mitel.

In a statement Mitel Networks says it has entered into a definitive arrangement agreement, unanimously approved by the Boards of Directors of both companies, under which Mitel will acquire all of the outstanding Aastra Technologies common shares for US$6.52 in cash plus 3.6 Mitel common shares per each Aastra common share.

The move has been valued at just under 400 million Canadian dollars or around £238 million.

The strategic move, designed to build scope and scale in a consolidating market, will create a billion dollar company with one of the largest global footprints in the industry, #1 market share in Western Europe, a US$100 million cloud business, and a global installed customer base ready for upgrade as the US$18 billion business communications market prepares to migrate to software-based cloud services.

The combined company will be headquartered in Ottawa, Canada and will operate under the name Mitel while continuing to leverage Aastra’s strong brand recognition in select European markets. The executive management team will continue to be led by current Mitel President and Chief Executive Officer, Mr. Richard McBee.

“The business communications market is ripe for consolidation and on the cusp of a mass migration to cloud-based services. We believe that small competitors with narrow focus and limited global reach will quickly be marginalized,” said Mr. McBee.

“Aastra’s solid financial structure, complementary portfolios, geographic reach, and large installed-base immediately augment and expand Mitel’s market footprint, enabling us to capitalize on a unique opportunity to leap-frog the competition and lead the market.”

Reporting to Mr. McBee will be Chief Financial Officer, Mr. Steve Spooner, and Aastra’s Co-CEOs, Mr. Francis Shen, who will assume the position of Chief Strategy Officer, and Mr. Tony Shen, who will assume the position of Chief Operating Officer. Mitel will increase the number of directors on its Board from eight to nine. Two existing members of the Mitel Board will step down and Aastra will have the right to appoint three new board nominees to fill the vacancies.

“Our two organizations are tightly aligned culturally and financially with little product, geographic or channel overlap” said Tony Shen. “We are stronger together, and combined we will be a major global player. We are confident that this merger will create value for our shareholders, customers, partners and employees,” added Francis Shen.

The combination of Mitel and Aastra will enable the companies to significantly expand their organisational scale and scope with a combined market presence of over 60 million end users in more than 100 countries and a global network of more than 2,500 channel partners, ideally positioning the new company to immediately capitalise on several key strategic growth opportunities.

Nearly doubling the stand-alone revenue of either company, the combination results in combined revenue for the new company of approximately US$1.1 billion for the trailing four quarters. The deal will create the financial scale and operational leverage to drive shareholder value.

The transaction will be carried out by way of a court-approved plan of arrangement and will require the approval of at least 66 2/3% of the votes cast by the shareholders of Aastra at a special meeting expected to take place in January 2014. Mr. Francis Shen and Mr. Tony Shen, who together control approximately 14% of the outstanding Aastra common shares, have entered into voting support agreements and confirmed their intention to vote their Aastra common shares in favour of the arrangement.

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