ShoreTel Facing Securities Lawsuit

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ShoreTel, Inc., its board of directors, Mitel US Holdings, Inc., Shelby Acquisition Corporation, and Mitel Networks Corporation are facing a proposed class action lawsuit filed in August that claims they issued a misleading recommendation statement in connection with a potential merger between ShoreTel and Mitel. The plaintiff in the case, a ShoreTel stockholder, says the defendants must expand upon their disclosure of ShoreTel’s financial projections and the valuation analyses performed by its financial advisor – J.P. Morgan Securities LLC – arguing that the information they provided was not sufficient for stockholders to determine for themselves whether the deal was fair.

The suit further argues that the recommendation statement is missing information concerning potential conflicts of interest of J.P. Morgan and the individual board members. In particular, the complaint takes issue with an alleged contradiction in the statement, noting that it claimed J.P. Morgan had provided no services to the defendants within the past two years but also admitted that the investment bank had received $500,000 from Mitel. Even further, the suit claims that the board members stand to receive a total of $1,150,000 in cash bonuses from the transaction and demands that the defendants release details of the communications that led to their approval.