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Vonage Holdings To Buy Vocalocity In $130 Mln Cash-stock Deal - Quick Facts

Vonage Holdings Corp. (VG), a provider of communications services connecting people through cloud-connected devices worldwide, said Thursday that it agreed to acquire privately-held Vocalocity Inc., an industry-leading Software as a Service or SaaS provider of cloud-based communication services to Small and Medium Businesses or SMBs for $130 million. The purchase price includes $105 million in cash and $25 million in Vonage common stock.

The Agreement has been unanimously approved by the boards of directors of Vonage and Vocalocity. Vonage expects that the transaction will be accretive to adjusted Earnings Per Share and on an EBITDA multiple basis in 2015.

The company noted that a portion of the purchase price will be deposited into escrow to partially secure Vonage's indemnification rights under the Merger Agreement in respect of any breach of Vocalocity's representations, warranties or covenants as well as certain other indemnifiable matters.

During the first half of 2013, Vocalocity had revenue of $28 million and growing, implying an annual run rate of greater than $56 million.

Upon closing, Vocalocity CEO Wain Kellum, will join Vonage as President, Business Services, and become a member of the Company's senior leadership team.

Vonage expects to achieve synergies from network operations and the use of technology for serving customers. Synergies in 2015 are estimated to be recurring and in the high single-digit million dollar range.

Vonage noted that it is financing the transaction through $30 million of cash from the balance sheet and $75 million from its credit facility. The company will continue to execute on its balanced approach to capital allocation and expects to complete its $100 million share repurchase program by the end of 2014 as planned.

The transaction is expected to close in the fourth quarter of 2013, subject to customary closing conditions.

by RTT Staff Writer

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