TTI Telecom Agrees to TEOCO Buyout

By Kelly Teal Comments

OSS vendor TTI Telecom, citing the challenges of remaining an independent public company in a rapidly consolidating sector, has agreed to a $58 million buyout offer from larger peer TEOCO Corp.

Virginia-based TEOCO supplies routing management to service providers and is looking to Israel’s TTI Telecom to expand its global presence. Together, the companies will offer cost, revenue, routing and network management products for operators providing VoIP, IPTV, and 3G and 4G wireless services. That is, if all goes as planned – TTI has until July 9 to solicit better M&A proposals.

As matters now stand, TEOCO intends to pay $3 per TTI share, a 24 percent premium over TTI’s Tuesday closing price of $2.42. The price could fall to $2.90 per share, however, if TTI’s transaction costs exceed a threshold agreed upon by the two firms. TEOCO and TTI expect to secure shareholders’ approval and then close the merger in the third quarter. Once that happens, TTI’s common shares will stop trading on the Nasdaq.

The TEOCO-TTI deal comes as the OSS segment has shrunk thanks to M&A. This year alone, Amdocs has bought MX Telecom, CA acquired Nimsoft, Oracle Corp. took over Convergin and CustomCall purchased Concretio. As a result, TTI didn’t think remaining a standalone company was viable, Meir Lipshes, TTI’s CEO and board chairman, said in a prepared statement. Therefore, Lipshes added, “after a careful and thorough analysis, and with the completion of extensive negotiations with TEOCO, the board of directors has decided to endorse this transaction as being in the best interest of our shareholders, customers and employees.”

Combined, TEOCO and TTI will employ more than 600 people and work with more than 75 communications service providers in 25 countries.

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