WESTFORD, Mass., June 25, 2018 /PRNewswire/ -- Ribbon
Communications Inc. (Nasdaq: RBBN), a global leader in secure
and intelligent cloud communications, today announced that it has
signed an agreement to acquire Edgewater Networks, a market leader
in Network Edge Orchestration for the small and medium enterprise
(SME) and Unified Communications (UC) market. The acquisition
is projected to result in Ribbon becoming the market share leader
for enterprise Session Border Controllers (SBCs) and Network Edge
Orchestration. This acquisition will allow Ribbon to offer
its global customer base a complete core-to-edge product portfolio,
unrivaled end-to-end service assurance and analytics solutions, and
a fully integrated SD-WAN service.
The acquisition expands and enhances Ribbon's solution offerings
to its customers. The combined portfolio is expected to further
strengthen the new Ribbon Protect UC security offering with voice
and data intelligence from the enterprise edge and customer
premises. With the ability to serve the core to the edge of the
network, Ribbon will be equipped to provide an end-to-end
connection to the enterprise and deliver unparalleled service
assurance, security and monitoring capabilities. Upon completion of
the transaction, the Kandy Unified Communications as a Service
(UCaaS) offering will also be enhanced with the ability to provide
analytics and service assurance capabilities across the enterprise
network edge. In addition, Ribbon's Microsoft Skype for
Business and Teams offerings will be expanded by Edgewater Networks
Intelligent Edge solutions.
"With Edgewater Networks strong, sustained growth in recent
years and their complementary solutions set, this acquisition makes
sense on a number of fronts for Ribbon, allowing them to strengthen
their position in enterprise SBCs," said Diane Myers, senior research director for IHS
Markit. "This is a high synergy, low overlap combination that gives
Ribbon a broad product line that serves customers of all sizes and
can be offered and distributed through multiple channels."
"This transaction demonstrates how we are delivering on our
strategic objectives and extending our market reach," said
Fritz Hobbs, President and Chief
Executive Officer of Ribbon Communications. "The combination
of Ribbon Communications and Edgewater Networks creates a
best-in-breed, complete platform that extends our leadership
position in the SBC, cloud UC, security and analytics markets."
"The customer footprint of our combined organization is
unmatched in the marketplace," said David
Norman, Chief Executive Officer of Edgewater Networks.
"The combination of Ribbon and Edgewater Networks will allow us to
better serve customers globally and accelerate our pace of
innovation in the UC and SD-WAN markets."
Kevin Riley, Chief Technology
Officer and Executive Vice President of Advanced R&D for Ribbon
Communications commented, "Together, Ribbon and Edgewater Networks'
solutions address the entire enterprise market.
Communications Service Providers, Managed Service Providers and
Systems Integrators will have a comprehensive product line and
support organization to deliver services to the rapidly expanding
Unified Communications market."
Overview of Edgewater Networks
- Edgewater Networks is a private company, founded in 2002.
- Edgewater Networks has more than 635,000 actively deployed edge
devices and more than 20 million connected endpoints.
- Edgewater Networks has approximately 80 employees and is
headquartered in San Jose,
California.
Transaction Details
- At the closing of the merger agreement, Ribbon will pay
Edgewater Networks shareholders an aggregate of $110 million, subject to customary post-closing
net working capital and debt adjustments, comprised of:
-
- $50 million of cash (subject to
customary net working capital adjustments) to be paid at the time
of closing and to be funded through
Ribbon's existing credit facility.
- $30 million of deferred cash
payments, to be funded through existing operating cash flows and
completed within 18 months from the closing date.
- $30 million of Ribbon common
stock to be issued at the time of closing, not to exceed 5.2
million shares.
- The transaction is expected to close in the third quarter of
2018 and is subject to customary closing conditions and regulatory
approvals.
Edgewater Networks Financial Highlights
- Edgewater Networks revenue was $64
million in 2017 and $50
million in 2016, primarily derived from sales within the
U.S. Over the past four years, Edgewater Networks has recorded
annual double-digit sequential revenue growth.
- Adjusted EBITDA1 was $4
million in 2017, a 98% increase compared to $2 million in 2016.
- The transaction is expected to be immediately accretive to
Ribbon's Adjusted EBITDA and Non-GAAP EPS post-closing.
1)
|
Please see the
reconciliation of non-GAAP and GAAP financial measures in the press
release appendix.
|
Key Takeaways
- The combination is expected to make Ribbon a market leader in
enterprise SBCs from SMEs all the way up to large enterprises.
- The acquisition of Edgewater Networks differentiates and
extends Ribbon's leadership position in the SBC, cloud, security
and analytics markets by offering the only portfolio of
edge-to-core solutions to service providers and enterprises of all
sizes.
- The acquisition allows Ribbon to take Edgewater Networks
solutions to market globally with a much larger distribution
channel.
- The Edgewater Networks portfolio enhances multiple Ribbon
offerings and strategic initiatives, including Kandy UCaaS, Ribbon
Protect and Microsoft Skype for Business and Teams solutions.
- Edgewater Networks' SD-WAN service provides Ribbon customers
with a complete solution for the SME market.
Advisors
TAP Advisors LLC served as Ribbon's financial
advisor, Latham & Watkins LLP served as Ribbon's legal advisor
and Ernst & Young LLP served as Ribbon's advisor for financial
diligence and related matters. AGC Partners served as
Edgewater Networks' financial advisor and Gunderson Dettmer Stough Villeneuve Franklin
& Hachigian, LLP served as Edgewater Networks' legal
advisor.
About Ribbon Communications
Ribbon Communications
Inc. (Nasdaq: RBBN) is a company with two decades of market
leadership experience in providing secure real-time communications
solutions to the top service providers and enterprises around the
globe. Built on world-class technology and intellectual
property, Ribbon delivers highly reliable, unified and embedded
real-time communications capabilities to customers in more than 25
countries and on 6 continents. The Company transforms fixed,
mobile and enterprise networks from legacy environments to all IP
and fully virtualized, secure, cloud-based architectures, enabling
highly productive communications for consumers and businesses.
Ribbon's market-leading communications security solutions are
based on a big data behavioral analytics platform and offer
customers enhanced network intelligence and security. The
Company's Kandy Communications Platform-as-a-Service (CPaaS)
enables rapid service creation and digital transformation by
delivering customers a comprehensive set of advanced embedded and
unified communications capabilities. To learn more, visit
ribboncommunications.com.
About Edgewater Networks
Founded in 2002, Edgewater
Networks is a market leader in enabling IP-based voice, video and
data services. Service providers and enterprises of all sizes
use Edgewater Networks solutions to simplify customer premise
configurations for quick and smooth installations, reduce time to
market and deliver rapid return on invested capital.
Edgewater Networks helps customers deliver intelligence at
the network edge with its Network Edge Orchestration platform that
includes the EdgeView Service Control Center, EdgeMarc Intelligent
Edges, and the QuickConnect Interoperability Lab. To learn
more, please visit www.edgewaternetworks.com or follow us on
Twitter at @ewn_inc.
Important Information Regarding Forward-Looking
Statements
The information in this release contains
forward-looking statements which are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and are regarding future events that involve risks and
uncertainties, including statements regarding delivering value to
customers. All statements other than statements of historical
facts contained in this release are forward-looking statements,
including statements regarding the acquisition of Edgewater
Networks, the time frame in which this will occur, satisfaction of
closing conditions, the expected benefits to Ribbon Communications,
including benefits to customers, introduction of new solutions, and
statements regarding expected future financial performance.
Actual results may differ materially from those contained in the
forward-looking statements in this press release.
Additionally, various risks and uncertainties could affect
Ribbon Communications' actual results and cause such results to
differ materially from those contemplated by the forward-looking
statements, including, without limitation, Ribbon's ability to
complete the transaction in the time frame expected or at all;
Ribbon's success integrating the businesses of Edgewater Networks;
Ribbon's ability to realize the anticipated benefits from the
transaction; and the effects of disruption from the transaction,
making it more difficult to maintain relationships with employees,
customers, business partners or government entities. For
further information regarding risks and uncertainties associated
with Ribbon Communications' business, please refer to the "Risk
Factors" section of Ribbon Communications' most recent annual
report on Form 10-K filed with the SEC. Any forward-looking
statements represent Ribbon Communications' views only as of the
date on which such statements are made and should not be relied
upon as representing Ribbon Communications' views as of any
subsequent date. While Ribbon Communications may elect to
update forward-looking statements at some point, Ribbon
Communications specifically disclaims any obligation to do so.
Discussion of Non-GAAP Financial Measures
This press
release contains the Adjusted EBITDA of Edgewater Networks, which
is considered a non-GAAP financial measure under the rules and
regulations of the Securities and Exchange Commission. The
reconciliation of Adjusted EBITDA of Edgewater Networks to net
income is included elsewhere in this release. Adjusted EBITDA
is a non-GAAP financial measure used by our investing community for
comparative and valuation purposes. We disclose this metric
to support and facilitate our dialogue with research analysts and
investors. Other companies may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure. While our management uses Adjusted EBITDA as a tool
to enhance their understanding of certain aspects of Edgewater
Networks' financial performance, management does not consider this
measure to be a substitute for, or superior to, GAAP
measures. Adjusted EBITDA should not be considered an
alternative for, or in isolation from, the financial information
prepared and presented in accordance with GAAP. Investors are
cautioned that there are material limitations associated with the
use of Adjusted EBITDA as an analytical tool. In particular,
many of the adjustments reflect the exclusion of items that are
recurring and will be reflected in our financial results for the
foreseeable future. We believe that providing Adjusted EBITDA
to investors, in addition to the GAAP presentation, will allow
investors to view the financial results in the way management views
them. We further believe that providing this information
helps investors to better understand the core financial and
operating performance of Edgewater Networks and evaluate the
efficacy of the methodology and information used by our management
to evaluate and measure performance.
Investor
Relations
Sara
Leggat
+1 (978)
614-8841
sleggat@rbbn.com
|
Analyst
Relations
Michael
Cooper
+1 (708)
383-3387
mcooper@rbbn.com
|
US
Press
|
International
Press
|
Dennis
Watson
|
Catherine
Berthier
|
+1 (214)
695-2224
|
+1 (646)
741-1974
|
dwatson@rbbn.com
|
cberthier@rbbn.com
|
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SOURCE Ribbon Communications Inc.
Copyright 2018 PR Newswire
Edgewater
Networks, Inc.
|
Reconciliation of
Non-GAAP and GAAP Financial Measures
|
(in
millions)
|
(unaudited)
|
|
Year
ended
|
Year
ended
|
|
December 31,
2017
|
December 31,
2016
|
Adjusted
EBITDA:
|
|
|
GAAP net income
(loss) (audited)
|
1.4
|
*
|
Interest (income)
expense, net
|
0.9
|
0.9
|
Income tax
provision
|
0.2
|
*
|
Depreciation and
amortization
|
0.8
|
0.8
|
EBITDA
|
3.3
|
1.7
|
Preferred stock
warrant expense
|
0.3
|
0.3
|
Severance
|
0.3
|
--
|
Stock-based
compensation
|
0.2
|
0.1
|
Non-GAAP Adjusted
EBITDA
|
4.1
|
2.1
|
|
|
|
* Amount rounds to
less than $0.1 million
|
|
|
|