Mitel goes public today, and the AP reports that the IPO price of $14 was below the previously-expected price of $18-$20. The IPO rasies $147.7 million, which Mitel plans to use, among other things, to pay down debt, much of it associated with its purchase of Inter-Tel.This Ottawa Citizen article suggests that the lower-than-expected price was due to the fact that multiple IPOs took place today, driving down several of these companies' planned offer prices.
"Mitel also likely paid a price for seeking more money than most other public offerings and for the spotty Mitel financial results of the last 18 months," the Citizen reports.
Interestingly, this Reuters article predicted the lower-than-expected price last week.
The company, whose backers include both Canadian billionaire Terry Matthews and Queen Elizabeth, will be valued more richly than competitors Alcatel-Lucent SA (ALUA.PA) and Cisco Systems Inc (CSCO.O) if it prices at the midpoint of the expected range.
Mitel has a price-to-earnings ratio of 60 compared with Alcatel-Lucent's 41 and Cisco's 21, said IPOdesktop.com President Francis Gaskins.
"It's overpriced. The last three quarters were flat and they barely made money in January if you back out the non-recurring adjustments," he said.
Mitel has a price-to-earnings ratio of 60 compared with Alcatel-Lucent's 41 and Cisco's 21, said IPOdesktop.com President Francis Gaskins.
"It's overpriced. The last three quarters were flat and they barely made money in January if you back out the non-recurring adjustments," he said.
As David Yedwab notes over at UCStrategies, the IPO runs counter to the trend of companies like Avaya and Siemens going private, though it's widely expected that both of these companies' private equity owners plan to take them public again at some point down the road.
