What happened

Shares of ShoreTel (NASDAQ: SHOR) have soared today, up by 28% as of 11:30 a.m. EDT, after Mitel Networks (NASDAQ: MITL) announced that it would acquire the telecommunications vendor.

So what

Mitel will be paying $7.50 per share in an all-cash deal for ShoreTel, valuing its equity at approximately $530 million. That purchase price represents a 28% premium to yesterday's close, corresponding to today's gains. Shares are currently trading within pennies of the purchase price.

Workers meeting and collaborating

Image source: Getty Images.

Mitel says that the deal will accelerate its growth and roadmap progress into the Unified Communications-as-a-Service (UCaaS) market. The combined company will be the No. 2 player in the UCaaS market, and Mitel CEO Rich McBee will stay at the helm.

Now what

In a statement, McBee said, "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." The combined company will have around 3,200 channel partners and a strong portfolio of communications and collaboration offerings.

ShoreTel had been exploring strategic alternatives since last August, and this deal concludes that process. The deal is expected to be accretive to non-GAAP earnings per share in the first year, and cost synergies are estimated to be $60 million.