Genband Eyes Acquisition Of Cedar Point: Sources

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Voice-equipment vendor Genband is on the hunt to increase its market share in cable -- and has its sights set on Cedar Point Communications, according to industry sources.

Cedar Point, historically focused on voice-over-Internet Protocol solutions for the cable market, has seen sales deteriorate in recent years. The privately held company maintains several cable accounts, including Comcast, Charter Communications, Insight Communications, Liberty Global and Mexico's Cablemás.

By picking up Cedar Point, Genband -- which also is private -- believes it would have more scale to challenge Cisco Systems and others in the cable segment, sources said.

"Genband has really followed a merger path. They've been rolling up companies," said an executive familiar with the company. "They have a real interest in going after the cable space. On the flip side, Cedar Point has been struggling -- they have absolutely seen their customers leave for different vendors."

Genband and Cedar Point declined to comment.

In Genband's biggest deal to date, the company in May 2010 paid a fire-sale price of $182 million net for Nortel Networks' carrier VoIP and applications business unit. Nortel, a former telecom equipment powerhouse, filed for bankruptcy in January 2009. Its major cable customers for digital voice systems had included Cox Communications and Rogers Communications.

With the Nortel Carrier VoIP and Application Solutions (CVAS) business, Genband more than quintupled in terms of sales and headcount, growing from about 400 to 2,200 full-time employees. Genband is on track to clear $800 million in revenue for 2010 on a pro-forma basis compared with $140 million in annual sales previously, according to the Plano, Texas-based company.

JP Morgan, which funded Genband's acquisition of Nortel CVAS through its One Equity Partners investment arm, also owns a stake in Cedar Point. STAR Ventures also is an investor in both Genband and Cedar Point.

Derry, N.H.-based Cedar Point, with about 200 employees, would be a small acquisition for Genband compared with the Nortel CVAS deal. One source indicated Genband is looking to clinch a deal within a matter weeks.

Another industry source said Cedar Point had hired Boston-based investment bank America's Growth Capital earlier this year to evaluate various "liquidity" options, including a possible sale.

Genband's other investors include Oak Investment Partners, Sevin Rosen Funds, Venrock, Columbia Partners Private Capital, Siemens, Invesco and Intel. Cedar Point's backers, in addition to JP Morgan and Star Ventures, include Ascent Venture Partners, Battery Ventures, Charles River Ventures, Comcast, Focus Ventures and Motorola.

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