In a move to become the second largest unified communications as a service player in the market, Mitel struck a deal on Thursday to acquire ShoreTel for US$530 million (A$665 million).
"This is a very natural combination that enables us to continue to consolidate the industry and take advantage of cost synergy opportunities while adding new technologies and significant cloud growth to our business," said Mitel chief executive Rich McBee, in a statement.
"Together, Mitel and ShoreTel will be able to take customers to the cloud faster with full-featured, cloud-based communications and applications."
Mitel and ShoreTel entered a definitive merger agreement in which Mitel will acquire 100 percent of the outstanding shares of ShoreTel common stock in an all-cash transaction, or a total equity value of approximately US$530 million and a total enterprise value of approximately US$430 million.
Mitel expects the acquisition to see its annual sales hit US$1.3 billion, and will double its UCaaS revenue to US$263 million.
The combined company will be headquartered in Ottawa, Canada and will operate as Mitel. The company will have about 3200 channel partners and a broader communications and collaboration product portfolio. After the close, Mitel will have a global workforce of about 4200 employees.
"Customers are clearly moving to the cloud at a rapid pace," ShoreTel chief executive Don Joos said.
"The combination of Mitel and ShoreTel creates a new UCaaS market leader with a differentiated strategy and solution, and a clear migration path so that no customer is left behind or will have to abandon what they already have to cloud-enable their organization."
Mitel' McBee will lead the combined organisation and Mitel chief finance officer Steve Spooner will continue in that role.
The acquisition is expected to be completed in the third quarter of 2017.
In May, Mitel unveiled plans to acquire select UC assets and support contracts from Toshiba.
Correction: An earlier version of this story ran an incorrect number in the headline. The value of the deal is US$530 million, the combined sales are expected to reach US$1.3 billion.