Momentum Telecom Announces Acquisition of Alteva

Friday, September 4, 2015 at 4:30PM
Jared Taylor in Alteva, Deal Advisor, Deals: ILEC, Momentum Telecom

Introduction

On Wednesday, September 3^rd, 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

Article originally appeared on JSI Capital Advisors (http://jsicapitaladvisors.com/).