Mitel and OpenText make major acquisitions

Recent acquisitions by telecom pioneer Mitel Networks Corp and Waterloo-based Open Text Corp are powerful indicators that Canada's information and communication technology sector (ICT) is bulking up to increase market share and take on global competition for cloud computing.

Ottawa-based Mitel is investing $400 million in cash and stock to acquire Concord ON-based Aastra Technologies Ltd which produces various telecom products and systems for accessing communication networks. Open Text is paying $1.17 billion to acquire privately held GXS Group Inc, a Gaithersburg MD-based leader in cloud-based, business-to-business (B2B) integration software and services.

All four companies are highly R&D-intensive, ranging from Mitel's 9.4% to Open Text's 14% (both 2012). The acquisitions bolster both Mitel and Open Text at a time when cloud computing ramps up as a preferred option for businesses worldwide.

Mitel was established in 1973 by Terence Matthews and Michael Cowpland and has gone through several ownership changes before it split into two parts in 2001 with Matthews acquiring the private branch exchange business and the semiconductor branch renamed Zarlink Corp (R$, September 28/11). A market leader in voice over IP and cloud-based computing, Mitel complements Aastra's strength in enterprise communications with its suite of open standard IP-based and traditional communications offerings.

The combined revenues of Mitel and Aastra will exceed $1.1 billion (both companies have experienced revenue declines in recent years) with Aastra shareholders owning 43% of the new company.

The Open Text acquisition of GXS will expand its market base to 80,000 customers and 19 billion annual cloud-based transactions, creating an globally competitive enterprise software management firm. Open Text specializes in structured content while GXS focused on structured content and B2B e-commerce.The purchase comprised $$1.1 billion in cash and $100 million in stock.

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