Network Equipment Technologies (NET), a provider of multi-service network exchange solutions for enterprise and government customers, announced that it has signed a definitive agreement to acquire privately held Quintum Technologies, an enterprise voice over internet protocol (VoIP) access switching and gateway solutions provider.
Under the terms of the agreement, NET will acquire all of the outstanding shares of Quintum for a total equity value of $41m, including $20.5m in cash and $20.5m in NET stock. The number of NET shares to be issued to Quintum shareholders will be determined five trading days prior to the transaction closing. NET will also assume approximately $2m of Quintum’s debt, which it intends to pay off in full once the transaction is closed. In addition, NET has committed to issue a number of stock options having an approximate Black Scholes valuation of at least $3m to Quintum employees. The boards of directors of NET and Quintum and stockholders of Quintum have approved the transaction and NET expects to close this during its third fiscal quarter, ending December 28, 2007.
NET offers NX Series and VX Series products, which are designed to enable interoperability and integration with existing networks for migration to secure IP-based voice and data communications, particularly in large enterprises and advanced voice exchange solutions. Quintum’s products are well suited for enterprise branch offices, SMB market, and the markets for hosted-voice and SIP-trunking solutions. The two organizations would together provide a scalable solution across all enterprise customer segments.
Quintum’s VoIP access switching and gateway products are distributed in more than 50 countries through independent resellers and have been deployed in both enterprise and service-provider networks globally. Upon completion of the transaction, Quintum will be a wholly-owned subsidiary of NET. Its products will continue to be sold under the Quintum brand through its existing channels, with the added leverage of NET’s organizational infrastructure to support larger deployments and expand the distribution reach to government and enterprise customers.
The acquisition of Quintum reflects NET’s strategy to broaden our VoIP product solutions. This will add further scale to our growing VoIP business and put us in a better position to address enterprise and government customer requirements. NET and Quintum share a common vision for the converged unified messaging and unified communications markets. Our technologies, product strategy and sales focus are highly complementary, said C. Nicholas Keating, president and Chief Executive Officer at NET.
In Asia, Quintum has built a substantial customer base and important partnerships, as well as integrated manufacturing capabilities. NET plans to evaluate opportunities to leverage Quintum’s manufacturing capabilities to reduce the cost structure on certain NET products, added Nicholas.
Since inception, Quintum’s focus has been to offer a logical migration path to a converged network infrastructure for enterprises and for next-generation service providers. We’ve developed a complete line of intelligent access and switching solutions. Combining with NET provides Quintum with access to significantly greater resources to better address and support our customers’ and partners’ needs, both today and in the future,, said Cheng T Chen, Chief Executive Officer and co-founder of Quintum.
This acquisition strengthens the positions of both the companies in the unified communications (UC) market. According to TelecomWeb, a telecom intelligence group, Quintum is one of only five vendors that have been certified by Microsoft so far as having ‘Qualified Gateways’ for Office Communications Server 2007. In the UC segment, Cisco, a supplier of networking equipment and network management, acquired WebEx in March 2007 to strengthen its position in the UC market.
NET expects to report its results for its fiscal second quarter on Wednesday, October 31, 2007, after market close. The company expects that revenues for fiscal 2008 will be in the range of $112m to $115m, excluding the effect of the acquisition of Quintum. Quintum’s unaudited quarterly revenue in its most recent fiscal year has been in the range of $4m to $5m. Following the acquisition, Quintum’s revenues and operating results will be consolidated with that of NET’s, and additional charges are expected for newly issued employee stock options and amortization of intangible assets.
