Contrary to my Friday predictions, Mitel decided to withdraw its offer for purchasing ShoreTel on Monday, November 17.  ShoreTel may not be an option today, but Mitel is probably already moving on to reviewing other acquisition targets.

Mitel started its offer process in October, first offering $8.10 a share in cash, for a total of $540 million -- remember this number, we'll come back to it. ShoreTel's board refused to talk with the company, so Mitel sweetened the offer with an additional $0.40 per share in Mitel common stock on November 10, bringing the total offer to $8.50 in stock and cash.

But ShoreTel's board of directors wasn't picking up the phone and issued a statement saying the $8.50/share offer significantly undervalued the company and "highly inadequate."  Presumably, Mitel and its investment advisors made the rounds to institutional shareholders—investment firms and wealth/pension funds holding large blocks of the stock—and didn't hear any great interest for a hostile takeover bid.  Lacking access to ShoreTel's books didn't help, either.

Mitel would have gained a strong and complementary market footprint in the U.S., where ShoreTel does more than 90 percent of its business. The merger would have built a combined firm that would have rated number 2 in the gear plus UC services market in the U.S., pushing Avaya down to three.

Presumably, Mitel still wants to expand its footprint in the U.S. and continue to increase its market share.  It has a $540 million cash war chest, plus can throw in stock to sweeten the deal.  There are several potential options, depending on how you might view the company's options.

Privately-held Digium is an interesting option, but unlikely.  Mitel would gain access to the Asterisk community of open source developers and resellers, plus pickup the Switchvox cloud service business. Estimates place revenues between $10 million to $25 million per year, but most of Digium's sales roll into the smaller part of the SMB marketplace.  Exactly what Mitel would do with Asterisk is an interesting question, but the fast-growing cloud services business might prove tempting.

Sangoma Technologies would be a hardware/software play, with no services involved. Revenues for its last fiscal year were at almost $14 million. The price would be low and it is a Canadian company. On the other side of the coin, the company wouldn't offer the larger U.S. footprint Mitel is looking for.

A more pure-play services offering can be found at 8x8. The company has steadily expanded operations overseas and operates white label operations for AT&T. It would be a good fit if Mitel felt it needed another boost in the cloud services market, and would provide a much stronger and diverse global cloud services footprint.   However, 8x8 is currently worth nearly $700 million as of November 18, so it is probably too expensive for Mitel's tastes.

One more alternative might be Rochester-based Allworx. Currently owned by Windstream, Mitel could pick up a decent U.S. footprint while giving Windstream a windfall on its balance sheet and getting it out of the PBX business. There's nothing wrong with Allworx hardware and software, but Windstream has to be in an awkward position when people start asking for Cisco and Microsoft solutions.  At this point, Allworx might be the best value for money in the M&A space.

Regardless, Mitel has shown it wants to grow through acquisitions. Stay tuned, because the company will probably spin up another deal or two in the next twelve months.