Ribbon Communications to Acquire Edgewater Networks for US$110 Million

Ribbon Communications (NASDAQ:RBBN) announced on Monday (June 25) that it has signed an agreement to acquire Edgewater Networks.

Ribbon Communications, a company focused on secure and intelligent cloud communications, will pay US$110 million to the shareholders of Edgewater Networks. Once the acquisition is completed, the release estimates that Ribbon is projected to become the market share leader for enterprise Session Border Controllers (SBCs).

Further, the company said that the acquisition of Edgewater Networks differentiates and extends Ribbon’s position in the SBC, cloud, security and analytics markets by offering the only portfolio of edge to core solutions.

In the breakdown of the acquisition that is expected to complete in third quarter of 2018, US$50 million of cash is expected to be paid at the time of closing and funded through Ribbon’s existing credit facility. Further, $30 million will be paid through deferred cash payments which will be completed within 18 months from closing date. Also, $30 million of Ribbon common stock is expected to be issued at the time of closing.

Fritz Hobbs, president of Ribbon Communications said that the transaction demonstrates how they are extending their market reach.

“The combination of Ribbon Communications and Edgewater Networks creates a best-in-breed, complete platform that extends our leadership position in the SBC, cloud UC, security and analytics markets,” Hobbs said in a release.

Kevin Riley, executive vice president of advanced research and development (R&D) for Ribbon Communications says the partnership will be able to better address the entire enterprise market.

“Communications service providers, managed service providers and systems integrators will have a comprehensive product line and support organization to deliver services to the rapidly expanding unified communications market,” Riley said in the press release.

Edgewater Networks, a provider of network edge orchestration, has more than 635,000 actively deployed edge devices with more than 20 million connected endpoints.

Edgewater Networks was founded in 2002 and recorded revenue of US$64 million in 2017 and US$50 million in 2016 with the company recording annual double digit sequential revenue growth over the past four years.

David Norman, CEO of Edgewater Networks said that the market reach of their combined organizations will be unrivalled by the competitors.

“The combination of Ribbon and Edgewater Networks will allow us to better serve customers globally and accelerate our pace of innovation in the UC and SD-WAN markets,” said Norman.

According to the most recent research report from Markets and Markets on the cloud communication platform, the global market size of the industry is projected to grow from US$1.36 billion in 2016 to US$4.45 billion by 2021, representing a compound annual growth rate (CAGR) of 26.8 percent during the forecast period.

The report said that the increasing demand of bring your own device (BYOD) and the growing inclinations of organizations to provide flexible work options are some of the factors fueling the growth.

Prior to Monday’s announcement, the company announced on June 21 that the US Department of Defense has completed one of the largest Voice over IP (VoIP) deployments in DoD’s history leveraging Ribbon Communications’ applications server to complete 50,000 plus unified communications deployment.

 Ribbon Communications closed Monday’s trading session  at $6.52, down 1.21 percent over the one day trading period. The stock has a buy ranking on TradingView with 13 verticals in favour, 10 neutral and three against.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.