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Amdocs to Buy Bridgewater for $215M

Ray Le Maistre

Service Provider Information Technology (SPIT) giant Amdocs Ltd. (NYSE: DOX) is buying policy control specialist Bridgewater Systems Corp. (Toronto: BWC) for C$211 million (US$215 million), the companies announced early Friday.

This is the second major SPIT acquisition of the week, following the news that Ericsson AB (Nasdaq: ERIC) is to buy Telcordia Technologies Inc. for US$1.15 billion. (See Ericsson to Buy Telcordia, Why Ericsson Wants Telcordia and Ericsson Signals New M&A Era.)

Amdocs is to pay C$8.20 per share in cash for Bridgewater, or C$211 million in total, with the deal set to close within the next 90 days.

That price represents a 30 percent premium to Bridgewater's closing share price of C$6.33 on the Toronto Stock Exchange at the close of trading June 16.

The deal propels Amdocs into the critical policy control sector, which is growing fast as mobile operators seek to manage, and make money from, the growing volume of data on their networks. Amdocs will be able to enhance Bridgewater's Policy and Charging Rules Function (PCRF) capabilities by integrating it with its existing charging solutions. (See Data Surge Fuels Policy Control Boom and Who Is Packing a PCRF?)

"This looks like a decent deal for Bridgewater. I think this is a good time for them to be acquired given all the pressure that is building in this market," stated Heavy Reading Chief Analyst Graham Finnie in an email to Light Reading.

"Bridgewater has had a pretty good run of late, but this is a very competitive market with a lot of big beasts like Alcatel-Lucent (NYSE: ALU) and Cisco Systems Inc. (Nasdaq: CSCO) launching new products."

The analyst added: "The major issue for Amdocs is whether its customers will want to acquire policy capabilities from it. There’s no doubt that the BSS-related stuff around charging & billing and customer experience management are all becoming a bigger part of the policy story, but right now the main buyers and policy decision-makers inside operators are in the network side, not the IT side."

So what is Amdocs getting for its cash? Well, Bridgewater reported full-year 2010 revenues of C$93.4 million (US$95.2 million) and net income of nearly C$23 million (US$23.5 million). The company's key customer is Verizon Wireless . (See Bridgewater Boasts 2010 Success, Bridgewater Boasts LTE Deal and Bridgewater Boasts Massive Verizon Deal.)

— Ray Le Maistre, International Managing Editor, Light Reading

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User Rank: Moderator
12/5/2012 | 5:01:36 PM
re: Amdocs to Buy Bridgewater for $215M

I had always believed that Policy Management as a separate market category will not survive for too long. It will morph into a broader solution set. Amdocs picking up Bridgewater is a clear sign of where market is headed. I believe this is just the begining of M&A in this space. Oracle dosen't still have a clear story on Policy Management and I am sure they would be looking to make an investment. Good exit for Bridgewater as market was getting very competitive for them especially with heavy weights throwing their weight in the Policy Management arena and offering policy management as part of their broader solutions suite.  

User Rank: Light Beer
12/5/2012 | 5:01:33 PM
re: Amdocs to Buy Bridgewater for $215M

Bridgewater's share price is up by C$1.77, almost 28 percent, to C$8.10, just short of the price Amdocs has agreed to pay (C$8.20). 

User Rank: Light Beer
12/5/2012 | 5:01:32 PM
re: Amdocs to Buy Bridgewater for $215M

BroadHop could be the next in line.

User Rank: Light Beer
12/5/2012 | 5:01:31 PM
re: Amdocs to Buy Bridgewater for $215M

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What makes you say that? Any particular speculation?


Whichever company is next, you can be pretty sure there is going to be a next in terms of policy control acquisitions --&nbsp;Tekelec got in early buying Camiant and Amdocs is getting Bridgewater but there are more still out there


Who's Packing a PCRF;


User Rank: Light Beer
12/5/2012 | 5:01:29 PM
re: Amdocs to Buy Bridgewater for $215M

Camiant, Bridgewater and BroadHop had always been the niche vendors in this space, coming out with a well defined policy management systems. Definitely they are ripe for acquisitions; and 2 of them have already been picked up.

With an expanded management team, and good customer wins - some Tier 1 vendors (either Telco or IT) could make best use of this.

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