Mobile broadband solutions company Tekelec, Inc. (TKLC) agreed Monday to be taken private by a consortium led by private equity firm Siris Capital Group, LLC for $11.00 per share in an all-cash deal valued at about $780 million. Separately, Tekelec also reported a profit for the third quarter compared to a loss last year, despite a revenue decline, reflecting significant margin improvement. The company also raised its earnings and revenue guidance for the full-year 2011.
Meanwhile, Morrisville, North Carolina-based Tekelec's board has unanimously approved the deal and has recommended its shareholders also to approve it. The deal, which is primarily subject to shareholder approval, is expected to close during the first quarter of 2012.
"Our customers can expect the same level of innovation and quality from our market leading products and our global team. In addition, the acquisition will provide us even greater flexibility to deliver best-in-class solutions for the mobile data and video market, with an unwavering focus on our global installed base of over 300 customers," Tekelec President and CEO Ron de Lange said in a statement.
The offer price of $11.00 per share represents an 11 percent premium over Tekelec's closing price of $9.90 on Friday. It also represents a 38 percent premium over the 30 day trading average closing price of Tekelec common stock.
Siris Capital Group, LLC focuses on acquisition of technology, telecommunications and healthcare industries. The consortium includes affiliates of ComVest Group, funds and accounts managed by GSO Capital Partners LP, Sankaty Advisors LLC, ZelnickMedia and other Siris limited partners and affiliates.
The buying consortium has secured committed financing, consisting of a combination of equity and debt financing.
Following the closure of the deal, Tekelec's management team is expected to remain in place, with Merle Gilmore, former President of Motorola's Communications Enterprise and Chairman of the Board of Airvana Network Solutions Inc., will take over as Tekelec's Executive Chairman.
Separately, Tekelex reported net income of $0.76 million or $0.01 per share for the third quarter, compared to a net loss of $0.13 million or breakeven per share in the prior-year quarter.
Excluding items, adjusted net income for quarter grew to $13.05 million or $0.19 per share from $10.17 million or $0.15 per share in the year-ago quarter.
Analysts polled by Thomson Reuters expected the company to report earnings of $0.18 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter edged down 2 percent to $106.18 million from $108.31 million in the same quarter last year, but topped six Wall Street analysts' consensus estimate of $104.27 million. Gross margins expanded 500 basis points to 60 percent fro last year's 55 percent.
Looking ahead to fiscal 2011, the company raised its guidance for adjusted earnings to a range of $0.36 to $0.43 per share on projected revenues between $395 million and $410 million from the previous guidance of $0.22 to $0.32 per share on anticipated revenues between $360 million and $400 million.
Street is currently looking for full-year earnings of $0.41 per share on annual revenues of $398.58 million.
TKLC closed Friday's regular trading session at $9.90, up $0.08 on a volume of 0.59 million shares, lower than the three-month average volume of 1.09 million shares.
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