Voice-equipment provider Genband announced Tuesday that it signed a definitive agreement to acquire Cedar Point Communications as part of Genband's ongoing push into the cable segment.
The announcement confirms a Multichannel News report in November that Genband was looking into acquiring Cedar Point.
Terms of the acquisition were not disclosed. Genband is offering mostly stock to Cedar Points shareholders. The companies signed the deal Dec. 24, 2010, and expect it to close in January 2011 subject to customary approvals and closing conditions.
With Cedar Point, Genband would pick up several key cable customers, including Comcast, Liberty Global, Charter Communications and Kabel Deutschland, as well as the cable-proven voice-over-IP Safari C3 switch platform to compete with the likes of Nokia Siemens Networks and Cisco Systems.
The deal comes one year after Genband reached an agreement to acquire the carrier VoIP and applications business unit of Nortel Networks, the erstwhile telecom-equipment powerhouse that filed for bankruptcy in January 2009. Major cable customers for Nortel's voice systems included Shaw Communications, Videotron, UPC, Cox Communications and Rogers Communications.
"This acquisition will not only increase our cable market-share, but it will also enhance our overall offering to meet the unique and demanding requirements of the high-growth cable market," Genband CEO Charlie Vogt said in announcing the deal. "Our combined vision of bringing advanced SIP and multimedia services to the cable market is one of the key drivers for this transaction, particularly as cable operators transition to IP. We look forward to supporting Cedar Point's outstanding customer base with what will now be an even more comprehensive portfolio of solutions."
Cedar Point has deployed 7.5 million phone lines worldwide, bringing Genband to more than 20 million lines in cable, Genband chief marketing officer Mehmet Balos said in an interview. That represents more than 40% share of cable VoIP, according to Genband's estimates.
Genband will maintain the existing Safari C3 voice switch platform, but will combine the Safari Fusion voice applications into its Genius application, call control, session border and security product lines.
"We talked to [Cedar Point's] customers, and they still want the [Safari C3] product to continue -- we have no intention of discontinuing the product," Balos said. At the same time, "they liked what they were hearing about Genband's size, the global scale and service capability... They wanted the financial security and stability of a larger company."
Genband will spend about $130 million in research and development in
2011. The privately held company had more than $700 million in revenue
in 2010, according to Balos.
While industry sources said Cedar Point has struggled lately, the company last fall claimed that it has never lost a customer and that its revenue has continued to grow on an annual basis.
Cedar Point currently has roughly 125 employees. A "significant amount" will join Genband, Balos said, declining to be more specific.
In the second half of 2011, Genband plans to close Cedar Point's Derry, N.H., headquarters when the lease on that facility expires. The former Cedar Point operations will then be consolidated in Genband's existing facility in Billerica, Mass., which is about 30 miles away.
Cedar Point president and CEO J.C. Murphy and chief financial officer Don Halsted will assist in the company's transition to Genband but will not remain with the company longer term.
In a statement, Murphy said, "I am confident that our customer base will benefit greatly from Genband's global scale, reach and vast service capabilities. Genband's expanded portfolio will accelerate the introduction of new value-added services and the transition of our customers to IMS."
Founded in 1999, Genband is based in the Dallas suburb of Frisco, Texas, and has operations in 50 countries. Genband's primary investor is One Equity Partners, the investment arm of JP Morgan that funded its $182 million acquisition of Nortel CVAS. Other investors include Oak Investment Partners, Sevin Rosen Funds, Venrock, Columbia Partners Private Capital, Siemens, Invesco and Intel.
Cedar Point's backers include JP Morgan, Star Ventures, Ascent Venture Partners, Battery Ventures, Charles River Ventures, Comcast, Focus Ventures and Motorola.