Mitel will not increase offer price for Inter-Tel

By Lisa Kerner

Charlotte, N.C., June 22 - Mitel Networks Corp. said it cannot increase its offer price in its merger agreement to acquire Inter-Tel (Delaware), Inc.

Inter-Tel sought a purchase price higher than Mitel's $25.50-per-share offer. Mitel believes its current offer provides Inter-Tel stockholders with fair value, greater certainty of closure, less risk and a 10% higher price than any party, including company founder Steven G. Mihaylo.

Inter-Tel's special committee already determined that Mihaylo's recapitalization proposal was not reasonably likely to lead to a transaction more favorable than the one offered by Mitel. Mihaylo recommended that the company use $200 million from its cash reserves and an additional $200 million of borrowings to begin a tender offer to purchase, after expenses and break-up fees, some 13.4 million Inter-Tel shares at $28.00 per share, a company news release stated.

Terminating the merger agreement would trigger a $20 million termination fee payable to Mitel.

On April 26, Mitel agreed to acquire Inter-Tel for $723 million. Both companies' boards have approved the transaction, which is expected to close in the third quarter of 2007.

"The market is consolidating and in the absence of a more favorable merger offer, Inter-Tel may be left out, with a leveraged balance sheet, unable to effectively compete against larger, well capitalized entrants," Mitel chief executive officer Don Smith said in a letter to Inter-Tel.

"We continue to believe that Mitel's $25.60 merger is in the best interests of Inter-Tel shareholders, employees and business partners and we look forward to concluding this transaction with Inter-Tel shareholders."

Mitel, based in Ottawa, provides unified communications solutions and services for business customers.

Tempe, Ariz.-based Inter-Tel specializes in applications using networks and server-based communications software.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.