ShoreTel (NASDAQ: SHOR) has essentially put itself up for sale, forming a Strategic Advisory Committee to explore that path forward along with potential alternative paths. But which companies could potentially bid for ShoreTel's unified communications, IP telephony and cloud businesses?
Updated July 27, 2017: Mitel has acquired ShoreTel.
One obvious starting point is to look at ShoreTel's rivals for potential buyers. Here's a look at those rivals and other potential bidders...
1. ADTRAN: The networking company already owns a stake in Digium -- one of ShoreTel's rivals. With a market cap of about $880 million, we doubt ADTRAN has the size or interest in a ShoreTel deal. Likelihood of a bid to buy ShoreTel: Low.
2. Avaya: How's this for ironic. Avaya also is up for sale. So we doubt the company will want to pay half-a-billion (or more) for a rival that isn't growing top-line revenues. But a private equity firm could lump Avaya and ShoreTel together... Likelihood of a bid to buy: Low.
3. Cisco Systems: You may recall Cisco killing off its UC 300 and UC 500 platforms for small business customers. At this point Cisco is more of an enterprise player, and M&A deals typically involve fast-growth startups. In stark contrast, ShoreTel revenues essentially are flat. Likelihood of bid to buy ShoreTel: Low.
4. Digium: Best known as the backer of Asterisk -- an open source IP PBX. Still privately held and aggressively extending from its on-premises history to a cloud model. In some ways, Digium and ShoreTel share similar business opportunities and challenges. But we doubt Digium has the war chest or stomach for such a big deal. Likelihood of a bid to buy: Low.
5. Mitel: Mitel made a bid to buy ShoreTel for $575 million in 2014, but walked away from the bid after expressing frustration with ShoreTel's board. Ironically, ShoreTel's market cap is currently $553 million -- about $22 million below the Mitel offer from two years ago. Likelihood of a bid to buy: Medium. Updated July 27, 2017: Mitel has acquired ShoreTel.
6. Microsoft: The software giant abandoned its own on-premises IP-PBX (Response Point) back in 2009, and now promotes a cloud PBX platform for Office 365. We think CEO Satya Nadella wants to double-down on pure cloud software plays and will want to avoid flat-growth or shrinking hardware businesses -- having already been burned by the Nokia buyout under former CEO Steve Ballmer. Likelihood of a bid to buy: Low.
7. NEC: An international technology company that would like to have a deeper footprint in North America. Likelihood of a bid to buy: Medium to low.
8. Polycom: Siris Capital Group, a private equity firm, acquired Polycom in July 2016. We think that deal will keep Polycom plenty business for the next few months. Likelihood of a bid to buy: Low.
9. Toshiba: Toshiba offers its IPedge and UCedge solutions across the midmarket for premises-based implementations, Gartner notes, and positions its VIPedge for cloud-based implementations through its dealer network. Likelihood of a bid to buy: Medium to low.
10. Unify: Atos, the European IT services provider, acquired Unify from Gores GRoups and Siemens in January 2016. We're not sure Atos has the appetite, interest and funding to pursue a similar deal with ShoreTel. Likelihood of a bid to buy: Low.
11. Private Equity Firms: PE firms could snap up ShoreTel, take the company private, eliminate costs with traditional on-premises gear and double-down on ShoreTel's growing hosted business. Likelihood of a bid to buy: Medium to high, though there are too many potential private equity firms to mention here.
Which companies did we overlook? Let me know ([email protected]) and I'll be sure to keep your tip in mind as we plan future coverage of ShoreTel.
