ShoreTel Acquires Hosted Unified Communications Specialist M5 Networks

By Nathan Eddy  |  Print this article Print

Following the close of the acquisition, M5 will be operated as a ShoreTel business unit and will be led by M5 CEO Dan Hoffman.

ShoreTel, a provider of IP phone systems with integrated unified communications (UC), announced it has signed a definitive agreement to acquire M5 Networks, a specialist in UC. Under the terms of the agreement, M5 shareholders will receive approximately $84 million in cash and 9.5 million shares of ShoreTel stock, which equates to a total of $146.3 million. M5 entered into hosted UC in 2000 and today provides more than 2,000 companies with communications on a subscription basis.

The acquisition of privately held M5 enables ShoreTel to expand its solutions into the cloud and reach a market segment of customers looking to deploy IP communications through a hosted model. Industry trends, such as cloud computing, virtualization, data center economics and the flexibility of services-based models, are driving the unified communications as a service (UCaaS) market, which provides businesses with another way to bring unified communications to their workforce.

Following the close of the acquisition, M5 will be operated as a ShoreTel business unit led by M5 CEO Dan Hoffman. Hoffman will become president and general manager of the new business unit. ShoreTel is acquiring M5’s entire operation, including its customer base, distribution capability and proprietary network, and will be extending offers to substantially all its employees.

"The acquisition of M5 positions ShoreTel as a leader in the fast-growing cloud UC market and delivers a suite of hosted telephony solutions that is unmatched in the marketplace," said Peter Blackmore, CEO of ShoreTel. "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."

While the engineering teams will remain separate, they will cooperate and coordinate in order to leverage the innovation and best practices of both groups so that both product road maps will benefit from the combined capabilities. The current ShoreTel Champion Partner reseller program will evolve to include the ability to offer hosted services once the reseller has been qualified and certified.

"M5 is proud to be one of the leaders in the UC cloud market. We have achieved this position with a very strong management team and an excellent product offering that is the simplest in the industry," said Hoffman. "Joining forces with ShoreTel enables us to reach our ambitions of scale and cement our position in the hosted UC marketplace."

According to a recent report by IT research firm Gartner, the IP voice as a service market is expected to grow at a 36 percent compound annual rate in North America through 2015, to reach $2.2 billion.