Amdocs to Buy Bridgewater for $215M
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