The strategic acquisition of Comverse‘s business support system assets is designed to expand and diversify Amdocs‘ customer base, particularly in Europe, Latin America and Asia Pacific. Amdocs will maintain and support Comverse BSS customers.
451 Research director, Sheryl Kingstone comments, “The Amdocs deal follows on the heels of Comverse’s recent release of its 2014 financial reports, in which it reported a 16% drop in billing revenue, to $251 million. Comverse does not fill any gaps in Amdocs’ technology portfolio, nor was it a competitive threat to Amdocs.”
She adds, “Acquiring Comverse’s billing division centres around grabbing additional customers, especially in Asia-Pacific and Europe. Considering most of the revenue is from existing managed service contracts, Amdocs is motivated to ensure those clients renew and shift over to Amdocs Customer Experience managed services offering.”
St. Louis-based Amdocs (NASDAQ: DOX), a leading provider of customer experience solutions, has entered into a definitive agreement to acquire a substantial majority of troubled Comverse’s business support systems (BSS) business unit assets. The cost will be approximately US$272 million in cash, subject to customary closing conditions. (Also see: Comverse to sell BSS business to Amdocs for US$272 million.)
The Boards of Directors of Comverse and Amdocs have approved the transaction. Subject to the satisfaction of the closing conditions, the deal is expected to be completed before end of September 2015.
Comverse is best known as a solutions provider focused on the global telecommunications industry. Last year the company unveiled a new product offering, Kenan CX. The platform builds on its predecessor – Kenan FX – to offer cloud-based billing and revenue management solutions. (Also see:
Comverse Kenan launches Kenan 3 to maximise customer monetisation.)
The acquisition is said to complement Amdocs’ market focus geographically by expanding and diversifying its global customer base, particularly in Asia Pacific, Latin America and Europe, and including Europe’s cable and satellite market. Comverse, which is publicly-traded and has recently seen falling revenues, will continue to exist as a separate company, with a focus on expanding its digital services.
“Amdocs is a leader in customer experience solutions for the communications industry. With Amdocs’ broad range of products and services, this agreement will only serve to benefit existing Comverse BSS customers,” said Philippe Tartavull, president and chief executive officer, Comverse. “Customers should feel assured by Amdocs’ experience with smoothly integrating acquisitions and their commitment to maintaining and growing relationships.”
“As a result of this acquisition Amdocs, with its more than 30-year industry experience, will be able to bring additional value and innovation to Comverse’s customers,” said Eli Gelman, president and chief executive officer for Amdocs Management Ltd. “As we move forward, the strength of our company and unique business model which combines products and services will enable Amdocs to offer even better services to customers as we leverage our joint professional industry expertise for the benefit of our customers.”
The impact of the acquisition on Amdocs’ diluted non-GAAP earnings per share (excluding amortisation of purchased intangible assets and other acquisition related costs and equity-based compensation expense, net of related tax effects) is expected to be neutral in the first year after closing, and accretive thereafter. The impact on diluted GAAP EPS will not be known until after Amdocs completes the purchase price allocation. Amdocs expects to incur acquisition-related expenses from operating adjustments, restructuring charges and other acquisition costs.
Comment on this article below or on Twitter: @jcvplus OR @VanillaPlusmag
