ShoreTel To Buy M5

By Josh Long

ShoreTel, the IP phone systems supplier, on Wednesday announced a $146.3 million agreement to acquire M5 Networks.

ShoreTel said the deal places it in a position to offer customers a choice between on-premise and hosted unified communications solutions. M5, which refers to itself as a “pioneer in cloud-based phone systems,” provides about 2,000 companies with enterprise-class phone systems under a hosted model.

This acquisition is a critical step in our evolution and enables the company to capitalize on trends in cloud computing and advance our enterprise communications strategy,” ShoreTel CEO Peter Blackmore said in a statement.

The terms of the agreement call for M5 shareholders to receive $84 million in cash and 9.5 million shares of ShoreTel stock. ShoreTel said the deal is worth $146.3 million based on its average stock price over the prior 30 trading days. There is another potential carrot for M5 shareholders: They will receive up to $13.7 million over a two-year period after the agreement closes if certain revenue performance milestones are achieved for the year ending Dec. 31, 2012.

ShoreTel is acquiring M5s entire operation, including its customer base, distribution capability, and proprietary network. ShoreTel plans to operate M5 as a business unit with M5 CEO Dan Hoffman leading operations.

ShoreTel intends to evolve its Champion Partner reseller program to give partners the option to offer hosted services once the reseller has been qualified and certified.

ShoreTel expects the agreement to close by the end of March.

Big layoffs are not anticipated: ShoreTel said it plans to extend offers to substantially all M5 employees.