Several class action lawsuits and a revolt by the founder threaten to derail a proposed $732 million acquisition of IP communications company Inter-Tel.
On Thursday, Inter-Tel founder, board member, and largest shareholder Steven Mihaylo sent a letter to shareholders urging them to vote against the proposed Mitel Networks acquisition and to instead consider a plan he has for recapitalization.
His letter adds to four class action lawsuits that shareholders have filed against the company, each of them charging Inter-Tel with failing to adequately entertain offers from other potential suitors.
"I have consistently urged the Company to undertake a process to sell the Company to the highest bidder. Contrary to my recommendation, the Board has aggressively argued against such a process while quietly pursuing a sale to a selected bidder without providing me or other potentially interested parties the opportunity to participate," Mihaylo wrote in his letter.
The debate between Mihaylo and the board appears to involve a struggle for power. In a letter to shareholders on Tuesday, Inter-Tel warned that under Mihaylo's plan, the company founder could achieve an ownership position allowing him to elect a large percentage of the board and giving him a potential veto right on any future transactions. The company also asks shareholders to consider Mihaylo's sincerity and credibility, suggesting that if Mihaylo's plan results in a significant stock price decline, that would allow him to buy back the company at a much reduced price.
Mihaylo made an offer for the company last year.
The shareholder suits have been filed in Arizona and Delaware. They each seek injunctions that would prevent the merger from going through.
Mitel announced its plan to acquire Inter-Tel in April. At the time, the boards of both companies approved the deal and they expected the transaction to close in the third quarter.
Mitel designs, markets and sells products such as PBX systems, IP integrated communications products, telephones, and network management software. Inter-Tel sells similar products, including converted IP PBX products and managed communications services.