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(Reuters) - Canadian telecommunications provider Mitel Networks Corp raised its offer for smaller U.S. peer ShoreTel Inc, after ShoreTel did not accept its earlier offer.
Mitel raised its offer to $8.50 per share in cash and stock from its previous offer of $8.10 per share in cash, representing a 3.7 percent premium to ShoreTel's closing price on Friday.
The revised offer values ShoreTel at about $574 million, $34 million more than Mitel's earlier bid.
The new offer comprises $8.10 per share in cash and 40 cents per share in Mitel common shares, or about 2.72 million shares.
ShoreTel said it would review the revised bid in consultation with its financial and legal advisers.
The proposal is open until Nov. 20 and represents a 38 percent premium to ShoreTel's enterprise value, Mitel said in a statement.
Mitel has discussed the proposed deal with a number of ShoreTel's largest shareholders, Chief Executive Richard McBee said in an open letter to ShoreTel Chairman Charles Kissner.
These shareholders support the logic and understand the benefits of a combination of the two companies, McBee added.
A successful deal would create the "industry's fastest growing cloud business with No. 1 market share by revenue and No. 2 market share by recurring cloud seats," Kanata, Ontario-based Mitel said.
Sunnyvale, California-based ShoreTel's shares rose 2.4 percent to $8.40 in premarket trading on Monday, while Mitel's Toronto-listed shares closed at C$11.30 on Friday.
Reporting By Shubhankar Chakravorty in Bangalore; Editing by Simon Jennings