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VoIP Systems

NexTone-Reef Point Merger in Works

According to sources, NexTone Communications Inc. and Reef Point Systems Inc. will announce a merger this week. Such a merger would combine the No. 2 player in the session border controller market with a Johnny-come-lately security gateway vendor specializing in fixed/mobile convergence.

NexTone VP of marketing John Longo wouldn't confirm that a deal was in the works. However, he says, "NexTone has been clear about looking at various points of growth, including M&A."

While the terms and structure of such a tie-up remain unclear, one source predicts the combined company would move forward with Reef Point CEO Woody Ritchie at the helm.

That would make sense, as current NexTone executive chairman David Walsh was brought in to manage the company after serving on the board of directors as managing partner of NexTone investor One Equity Partners . (See NexTone Nixes Management.)

Both companies have had a high rate of management turnover over the last several years. NexTone has had three CEOs over the course of the last four years. Before Ritchie took over last summer, Reef Point had gone through three CEOs in the two years prior. (See Reef Point Lands $21M, Gets Woody.)

While the combination of the two companies will certainly make a combined entity bigger, it's unclear how well the technologies will play together.

Reef Point has reinvented itself a couple of times in its seven-year history. Generally focused on security of some sort, Reef Point styled itself as an edge router vendor before taking a punt on fixed/mobile convergence in the last year or so. The firm has raised $146 million in six rounds of funding -- four as Quarry and two as Reef Point -- since 2000. (See Reef Point Lands $21M, Gets Woody, Reef Point: You Were the Quarry, Friday Funding Roundup, and Quarry Mines IP For Gold .)

— Ryan Lawler, Reporter, Light Reading

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