CSG to Buy Intec for £237M
CSG is offering Intec's investors 72 pence per share, a 27.4 percent premium over yesterday's closing price of 56.5 pence. While that sounds like a good deal for Intec shareholders, Intec's share price was as high as 120 pence in January this year.
The Intec board is recommending the deal, which needs to be approved by more than 75 percent of Intec's shareholders.
Not surprisingly, the news sent Intec's stock soaring. The company's share price jumped 18.5 pence, nearly 33 percent, to 75 pence in early morning trading on the London Stock Exchange.
For CSG, the move is all about expanding its prospects and reach in the Service Provider Information Technology (SPIT) market. (See The SPIT Manifesto.)
CSG is well entrenched as a provider of customer and billing management solutions to satellite broadcasting and cable operators in North America, but is over-reliant on this market. CSG, which reported revenues of $500.7 million in 2009, currently generates 85 percent of its sales from the US cable and satellite broadcasting markets. (See CSG Systems Reports Q4, Dish Reups With CSG, Cox, CSG Extend Billing Deal, and Charter Putting CSG Everywhere.)
Intec, which boasts retail and interconnect billing platforms in its portfolio, has a more diversified range of customers, including more than 60 of the world's top 100 carriers among its 400 customers worldwide. (See Intec Boasts Performance Levels and Intec Enhances Billing System.)
Its customer base includes AT&T Inc. (NYSE: T), Bharti Airtel Ltd. (Mumbai: BHARTIARTL), China Mobile Ltd. (NYSE: CHL), China Unicom Ltd. (NYSE: CHU), Deutsche Telekom AG (NYSE: DT), Orange (NYSE: FTE), Telefónica SA (NYSE: TEF), Telekom Malaysia Bhd. , and Vodafone Group plc (NYSE: VOD).
CSG says the combined company will be the second biggest supplier of business support systems (BSS) in the world with "a highly attractive end-to-end customer interaction management platform, combining mediation, billing, rating, charging, product catalog, customer care, web self-service, analytics, interactive messaging, interconnect services, workforce management and marketing services."
CSG says it would integrate Intec's products, including the Singl.eView retail billing system, into its Advanced Convergent Platform, a move that would enable customers to roll out new services aimed at "enterprise commercial services, convergent billing for wireless services, wholesale billing," and transaction data management.
If the takeover is successful, CSG/Intec would have combined 2010 (calendar year) estimated revenues of about $760 million and about 3,600 staff. CSG says it plans to offer jobs to all of Intec's 1,600 staff, "with only limited exceptions relating to executive management."
While it has been struggling recently, Intec, which has been cutting costs this year and which is almost debt free, hasn't been losing a lot of money. In the six months to the end of March 2010, the company a net operating loss of £4.1 million ($6.4 million) from revenues of £70 million ($110 million).
And in a recent statement issued to investors, Intec noted that the "outlook for 2011 indicates that conditions are no longer worsening and, combined with the substantial cost cuts successfully implemented during the summer as announced at the half year, leads us to a more optimistic view for next year."
— Ray Le Maistre, International Managing Editor, Light Reading