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Friday
Sep042015

Momentum Telecom Announces Acquisition of Alteva

Introduction

On Wednesday, September 3rd, Momentum Telecom announced its acquisition of Alteva (NYSE: ALTV).  Alteva’s main focus today has been on cloud-based UC on a BroadSoft platform. 

Transaction Facts

  • Transaction is for approximately $28.7 million.
  • As a result of the transaction, Alteva shareholders will receive $4.70 per common share, once the deal closes, which is expected to be during Q4 2015. 
  • Transaction will give Momentum additional scale.

Strategic Considerations

  • Deal increases Momentum’s user count to over 250,000.
  • Improves the company’s marketing and sales initiatives.
  • Delivers value in the form of support to existing and new customers.
  • Bill Fox, President & CEO of Momentum commented on the transaction saying “The combined strengths of these two companies further enhance Momentum Telecom as a market leader in the VoIP and unified communications industry.”

JSICA’s Take

  • Adds to the consolidation that has been occurring in the VoIP and unified communications industry.
  • TTM Revenue as of June 30, 2015 was approximately $30.39m, which implies a revenue multiple of 0.9x.
  • Cash flows from operations have been negative for several years. Alteva’s TTM OIBDA for the quarter ending June 30, 2015 was ($2.97 million).
  • Alteva was formally Warwick Valley Telephone Company (WVTC)
  • The transaction represents a 31% premium to Alteva’s closing share price on 9/2/2015.

Alteva Timeline