OTTAWA--Mitel Corp. today announced plans to turn itself into a pure-play semiconductor company by agreeing to sell off its communications systems division for $350 million in cash and a minority interest in a business controlled by Terence H. Matthews, a co-founder of Mitel. The transaction is expected to be completed in February 2001.
"With this announcement, we are taking a significant step in our evolution and sending a clear signal that we will focus on the opportunities and challenges of the communications semiconductor market," said Kirk K. Mandy, president and CEO of Mitel. "We turn a fresh page on our future knowing that both businesses will be well placed for success."
Mitel's semiconductor business surpassed its telecommunications systems revenues in the past year. In the fiscal quarter, ended Sept. 29, Mitel Semiconductor had revenues of $194.3 million, or 54% of the company's entire sales. In fiscal 2000, ended March 31, Mitel chip sales were 602.8 million compared ot $557.7 million in the previous year.
The Canadian telecommunications company gave its chip business a major shot in the arm in 1998, with the purchase of Plessey Semiconductors Ltd. for $225 million (see Feb. 13, 1998 story). Recently, Mitel announced plans to add 400 semiconductor engineers and invest $20 million to make room for the expanded workforce at its headquarters (see Sept. 14 story).
"As a new 'pure play' semiconductor company, we are well positioned with a strong top-tier customer base, a proven global network of sales and support channels, leadership in a number of key industry segments, and a deep pool of technological expertise and product development," said Mandy. "We plan to drive forward with new attitude, focus and growth."
The sale of Mitel's systems business--which supplies private branch exchange (PBX) systems--is subject to a final agreement, regulatory review, and other approvals, said the company.