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Has Tekelec Been Undervalued?

Within hours of Tekelec announcing its intended acquisition by a group of private equity firms for about $780 million, some investors were calling foul, saying the deal undervalues the company by hundreds of millions. (See Tekelec to Be Acquired.)

Tekelec, which today also reported its third-quarter results, is set to be acquired by a consortium of firms led by Siris Capital Group for $11 per share in cash, an 11 percent premium over the closing price last Friday, and a 38 percent premium over the 30-day trading average closing price.

But financial law firm Tripp Levy PLLC has announced an "investigation" into the deal, stating that analysts value the firm at $16 per share, nearly 46 percent higher than the price agreed with the Siris consortium.

At $16 per share, Tekelec would be valued at more than $1.1 billion. Tekelec shares were up $1.12 (11.31 percent) to $11.02 each in early trading Monday.

Tekelec today announced third-quarter revenues of $106.2 million and earnings before one-time costs (also known as non-GAAP earnings) of $0.01. (See Tekelec Reports Small Q3 Profit.)

The vendor has diversified in recent years from its traditional telecom signaling sector into policy management and subscriber data management with a couple of Service Provider Information Technology (SPIT)-related acquisitions. And now it's one of the leaders in the emerging Diameter routing sector. (See Tekelec on a Tear and Tekelec Splashes $165M on SPIT Specialists.)

— Ray Le Maistre, International Managing Editor, Light Reading

Susan Becker 12/5/2012 | 4:49:30 PM
re: Has Tekelec Been Undervalued?

I've been in companies when new management takes over who are more involved in the financial side than the technological side, and priorities often shift. The question for those interested in Tekelec's recent move to the Diameter market is if their business will really proceed as usual. Will be interesting. 

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