Mitel Networks Corp (NASDAQ:MITL) has announced that it signed a Memorandum of Understanding that will guarantee the transfer of some of its business assets to Toshiba Corp (USA) (OTCMKTS:TOSYY).
Mitel stated that the MOU it signed will allow it to receive some assets including inventory and obligations from Toshiba. The deal is part of Toshiba’s move to exit the market. The MOU not only facilitates the transfer of the assets, it will also act as a transition service agreement that will ensure that Toshiba’s customers will continue to receive uninterrupted products and services as per their previous contract with Toshiba. This will open up the doors for Toshiba’s customer base to access the products and services from Mitel.
Mitel is expanding its business in the UCC market
Mitel’s deal with Toshiba will allow the enterprise communications firm to strengthen its position in the UCC market as part of its strategy. The aim is to take advantage of the rising demand for cloud-based communication solutions. The acquisition of Toshiba’s business assets is thus an ideal move which gives it more leverage in the UCC Market.
“Toshiba’s communications business is a perfect complement to Mitel and ultimately benefits our current customers and channel partners by expanding our footprint capabilities,” stated Mitel’s Chief Marketing Officer Wes Durow.
Toshiba has earned itself quite a good reputation in the industry due to its innovation and insight. This is also advantageous for Mitel because it is buying into resources from a credible source as well as a business that is already well established. It is not clear why Toshiba decided to exit the market though it is most likely because the firm wants to downsize or divert its focus towards its strong points.
The MOU transaction is expected to be effective immediately and as such, the results should be a wider customer base for Mitel. Durow further added that the acquisition would allow his firm to scale up and even do more cloud-based business. Unfortunately, not much information has been released regarding the dealings especially the financial terms of the agreement.
Mitel stock closed the latest trading session at $6.94 after surging by 2.51 percent compared to the value of the stock during the previous close.