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Transaction
Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study 79

SOKOLOFF & COMPANY CASE STUDY:
Amdocs Acquires Comverse, Inc

DATE ANNOUNCED: April 29, 2015
BUYER: Amdocs (Nasdaq: DOX)
SELLER:  Comverse, Inc. (Nasdaq: CNSI) - Sale of BSS ASSETS          
PURCHASE PRICE: $272 Million
FORM OF PURCHASE PRICE: Cash

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES

Year

FY 2013

FY 2014

Trailing Twelve Months
through
January 31, 2015

Revenue

$439.83M

$545.80M

$250.7M

EBITDA

$75.25M

$93.08M

$50.5M

Cash

 

 

NA

Debt

 

 

NA

Purchase Price

 

 

$272M

Enterprise Value

 

 

$272M

Multiple of Revenue

 

 

1.08

Multiple of EBITDA

 

 

5.39

Numbers shown have been derived from Comverse SEC 10-K filing.

TRANSACTION DRIVERS
The acquisition geographically complements Amdocs' market focus by expanding and diversifying Amdocs' global customer base, particularly in Asia Pacific, Latin America and Europe, and including Europe's cable and satellite market.   Publicly traded Comverse will continue to exist as a separate company, with a singular focus on expanding its global market leadership in digital services.

"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 Limited. "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." 

SOKOLOFF COMMENTARY:
Continuing with the long slow decline precipitated after criminal charges were filed against Comverse founder and CEO Kobe Alexander in July of 2006, the once mighty Comverse and its BSS unit have seen better days.  Mr. Alexander fled the U.S. and remains a fugitive to this day in Namibia.  A victim of years spent under a cloud of suspicion; its parent unable to report properly to the SEC, Comverse BSS also faced a maturing BSS/OSS industry. 

Amdocs, who still stands as the industry’s 800 pound gorilla, has been reduced in recent years to low single digit growth.  The addition of Comverse will bolster top line through next year and cost cutting should improve the bottom line significantly. 

We can check all the boxes that suggest Amdocs has made a winning purchase. The blending of similar corporate cultures and an Israeli foundation; a low valuation; numerous business synergies and redundancies; and a global Tier 1 carrier customer base should make the acquisition easy to digest and immediately accretive.

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