- US$1.1 billion in diversified annual revenue
- #1 market share in Western Europe
- US$100 million global cloud business
- Global customer base of 60 million customers
Mitel® Networks Corporation (Nasdaq:MITL) (TSX:MNW), a global leader in business communications, today announced it has completed its merger with Aastra Technologies Limited. With US$1.1 billion of combined annual revenue and 60 million customers worldwide, Mitel now has one of the largest global footprints in the industry and is driving consolidation in the US$18 billion business communications market.
Clear Market Leadership
With #1 market share in Western Europe and a top five position globally*, Mitel is well positioned to capitalize on a massive global growth opportunity as the market begins a long-term migration to cloud-based services.
"With this merger the combined annual revenue of Mitel exceeds a billion dollars, which we believe creates the financial scale and operational leverage to drive shareholder value and profitable growth in an opportunity-rich consolidating market," said Richard McBee, President and Chief Executive Officer of Mitel. "We now have double the talent, tools and range of solutions to aggressively compete for a greater share of our market."
Customer Choice with the Best Path to the Cloud
Mitel offers the most comprehensive portfolio in the industry, covering the entire customer and market landscape. From digital to IP to Cloud; from platforms to applications to devices; for the very smallest business to the very largest enterprise, Mitel's portfolio now offers customers ultimate control to maintain, migrate, or upgrade their business communications systems at their own pace.
With the best path to the cloud - private, public or hybrid - Mitel's integrated portfolio enables a significant competitive advantage and ideally positions the company to serve customers and channels globally, regionally, and vertically; now and well into the future.
With a $100 million annual R&D budget as a combined business, Mitel has the resources needed to support ongoing innovation and a broad range of global and regional solutions, protecting customers by limiting the risk of stranding them and their investment.
Sound Financials and Attractive Synergies
In conjunction with the closing of the merger, Mitel today completed financing of a $405 million credit facility consisting of a $355 million term loan maturing in January 2020 and an undrawn $50 million revolving credit facility maturing in January 2019. The $355 million term loan is priced at LIBOR, plus 4.25% with a LIBOR floor of 1.00%. The undrawn $50 million revolving credit facility is priced at LIBOR, plus 4.25%.
"We are pleased to have secured new credit facilities on these very favorable terms, which significantly reduces our annual interest cost and enhances our operating flexibility," said Steve Spooner, Chief Financial Officer, Mitel. "Our new capital structure, combined with the enhanced cash flow generation we expect from the merger, positions Mitel with one of the best financial platforms in the industry."
Proceeds from the new credit facilities were used to finance the merger of Aastra, repay the $259 million outstanding under the existing credit facilities, as well as fees and expenses related to the transactions. Jefferies Finance LLC and The Toronto-Dominion Bank were Joint Lead Arrangers and Joint Book-Running Managers for the new credit facilities. Jefferies LLC acted as financial advisor to Mitel in connection with the merger and financing arrangements and TD Securities Inc. acted as financial advisor to Aastra.
The company anticipates approximately US$50 million of run rate synergies within two and a half years, driven by supply chain optimization, facilities consolidation and economies of scale. With the merger completed, Mitel expects the combined cash flow will allow for ongoing debt repayment and is expected to provide Mitel liquidity and flexibility to aggressively pursue growth opportunities.
Terms of the Agreement
Mitel acquired all of the issued and outstanding Aastra common shares. Under the terms of the Arrangement, shareholders of Aastra received US$6.52 in cash plus 3.6 common shares of Mitel (the "Mitel Shares") for each Aastra common share held. The total amount of cash paid by Mitel was approximately US$80.0 million and the number of Mitel Shares issued was 44,162,509. Mitel financed the cash consideration of the transaction from cash on hand and from a portion of the proceeds from the new credit facility as discussed above.
*Source: MZA PBX/IP PBX Market, World Quarterly Edition, Q2 2013, TTM Q3 2012 - Q2 2013