The Ottawa-based company today announced that it was selling its mobile division to Xura Inc., for US $350 million in cash, plus $35 million in a non-interest bearing promissory note as well as an equity interest in Sierra Private Investments L.P., the limited partnership that will own both Xura and the mobile division. Xura, Inc. is a provider of digital services solutions.
The move is an about-face from Mitel’s position back in 2015 when it snapped up Mavenir Networks for $560 million. Mitel, which for years known as considered a consolidator in the enterprise communication market, framed the purchase as an opportunity to tap into the emerging market 5G wireless technology.
But now Mitel is intent on digging into cloud communications.
The company said today’s announcement “reflects a strategic decision made during Mitel’s recent annual business review to refocus the company exclusively on the Unified Communications and Collaboration (UCC) market as digital transformation accelerates demand for cloud-based business communications solutions globally.”
“This transaction will allow Mitel to achieve these goals,” said Rich McBee, CEO of Mitel. “It also enables us to intensify our focus capital in expanding our leadership position in the enterprise market as it prepares for large scale digital transformation of premise-based systems to the cloud.”
He said employees and customers of Mitel’s mobile division will “benefit by being part of a large carrier-focused company with the size, scale and support infrastructure needed to truly compete for and drive the next wave of 4G/5G innovation.”
The sale of the Mobile division is expected to close in the first quarter of 2017, subject to obtaining necessary regulatory approvals and other customary closing conditions. The transaction is not subject to any financing condition.
McBee said he believes Mitel shares are substantially undervalued. As a result, the company intends to implement a share buyback program in conjunction with a full evaluation of our capital structure.
“We are working with our Board and financial advisors and will announce details in the near-term,” he said.
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