Inter-Tel told shareholders last week that Vector Capital sent a letter proposing to purchase the company for $26.50 per share. That would yield a "superior proposal" to Canadian telecommunications company Mitel Networks' deal to purchase the Arizona-based company for $25.60 per share.
Inter-Tel now will open talks with Vector Capital to discuss the investment firm's plan to submit a formal offer, which is subject to review, financing and other conditions.
Inter-Tel told Mitel of the letter spelling out the competing bid and will give Vector access to the company's books and other necessary information.
"There can be no assurances that these discussions and the due-diligence process will lead to a transaction involving the company and Vector Capital," Inter-Tel told shareholders last week in a securities filing.
News of the competing bid sent shares up 5 percent to $26.90, the company's highest closing share price of the year.
Inter-Tel's board last year rejected two less-lucrative deals offered by Vector Capital and founder and former Chief Executive Officer Steve Mihaylo, who was ousted from the company in February 2006. Mihaylo and Vector wanted to take the company private and accelerate the company's push to Internet-based phone and data systems.
There is no indication that Vector has partnered with Mihaylo for the current bid, but the founder will have a say over any merger as the company's largest shareholder. He holds 18.5 percent of outstanding shares.
The privately owned Ottawa, Ontario-based Mitel plans to maintain its Canadian headquarters after acquiring Inter-Tel, which would be a wholly owned subsidiary. Inter-Tel CEO Norman Stout has said the company would keep its U.S. headquarters in Arizona. It's unknown whether any Inter-Tel corporate jobs would be shifted to Mitel's headquarters in Canada.
Inter-Tel is allowed to terminate the Mitel merger agreement if it receives a "superior proposal" and pays a $20 million termination fee to Mitel, according to proxy documents filed this month with the US Securities and Exchange Commission.