OTTAWA _ Mitel Networks Corp. (TSX:MNW) says it will sell its mobile division less than two years after it acquired the business.
The Ottawa-based company announced Monday it will receive US$350 million cash, a US$35-million promissory note and an equity interest in Sierra Private Investments, a limited partnership that will own the business and Xura, a digital communications services firm.
Mitel said it wanted to focus on growing its cloud-based communications business.
“Employees and customers of the mobile division will benefit by being part of a large carrier-focused company with the size, scale and support infrastructure needed to truly compete for and drive the next wave of 4G/5G innovation,” Mitel CEO Rich McBee said in a statement.
Pardeep Kohli, who was CEO of Mitel Mobile’s predecessor and later co-founder of startup Ranzure Networks Inc., will become chief executive of the combined company which will be based in Dallas.
The current president of Mitel Mobile, BG Kumar, will join Kohli’s management team.
Mitel says cash from the sale will be used to repay debt.
The company expects to record a significant write-down of goodwill related to the transaction in the fourth quarter of 2016.
Mitel _ which focuses on communications technology for businesses _ paid a combination of cash and stock valued at US$560 million to acquire the mobile division’s predecessor, Mavenir Systems, in 2015.