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Archives > Transaction Case Study #9
West Corporation to Acquire Intrado Inc.
Today's case study looks at West Corporation’s (NASDAQ: WSTC) announced acquisition of Intrado Inc. (NASDAQ: TRDO). Announced on January 30, 2005, it is expected to close by the end of the second quarter, subject to Intrado shareholder approval and customary closing conditions. WSTC has agreed to purchase TRDO for $26 per share in cash. The day before the it was announced, TRDO was trading at $23 per share. At the close of business on the 30th, it was up 11.83% to $25.72 per share, the highest share value in four years. WSTC's stock, currently near its highest point in 5 years (the high was at $42.52 on January 6th), was not significantly impacted by the announcement, ending the day at $40.16.
West Corporation, revenue $1.46 billion, is a provider of outsourced communication solutions including customer acquisition, customer care and retention services, interactive voice response services and conferencing and accounts receivable management services. Intrado, revenue $147.6 million, is a provider of integrated data and communications solutions for telecommunications providers and public safety organizations including uninterrupted mission critical services like 911 to all major US telecommunications providers.
WSTC has agreed to pay $465 million, net of option proceeds and cash on hand. Based on this number, WSTC is paying 12.38x EBITDA and 3.15x revenue.
Both West and Intrado have similar recurring revenue business models, with high EBITDA margins (WSTC is 24.3% and TRDO is 25.3%).
West Corporation will use cash on hand, an existing bank credit facility and additional debt to fund this transaction. As reported by WSTC, the transaction is expected to be slightly dilutive to earnings on a GAAP basis in 2006 and accretive in 2007. Intrado will be integrated into West’s Communications Services segment.
Thomas B. Barker, Chief Executive Officer of West Corporation said, “Intrado complements the existing offerings of our Communications Services segment, providing a highly visible revenue stream and additional cross-selling and margin expansion opportunities.”
George Heinrichs, Chief Executive Officer of Intrado said, “Being part of West Corporation represents the best future for all Intrado stakeholders: shareholders; customers; employees; partners and suppliers; the general public - which our business ultimately serves every day; and the communities within which we operate. We anticipate a smooth integration process once the transaction is finalized.”
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