Amdocs is acquiring Comverse's BSS business in a deal worth $272 million that will let Amdocs expand its geographical reach and allow Comverse to focus solely on its digital business.
Amdocs Ltd. (NYSE: DOX) says its acquisition of a "substantial majority" of former competitor Comverse Inc. (Nasdaq: CNSI)'s business support systems (BSS) business unit will allow Amdocs to diversify its customer base into Asia Pacific, Latin America and Europe's cable and satellite market.
Comverse, which has been in the process of restructuring amidst financial struggles, will continue to exist as a separate company, now solely focused on digital services. In announcing the acquisition, the CEOs of both companies stressed Amdoc's experience integrating acquired companies and its desire to add value to Comverse's existing customers. (See Getting to Grips With Comverse.)
Amdocs has long been rumored to be interested in Comverse's billing assets as part of its bid to expand through acquisitions. And, for its part, Comverse was looking for a way out. Earlier in the week the vendor also signed an agreement with Tech Mahindra Ltd. to transfer some of its digital services employees to the Indian company as part of its plan to layoff 14% of its workforce. (See 10 SPIT Vendors to Watch in 2015.)
The acquisition has been approved by both companies' boards and is expected to close by September. Amdocs says it will have a neutral effect on its earnings in the first year after closing and will be accretive thereafter. Shares of the company were trading up .25%, or .14 points, to $55.57 after the deal was announced Wednesday.
— Sarah Thomas, , Editorial Operations Director, Light Reading