Edgewater Networks – acquired for 26.83x EBITDA multiple

On June 25, 2018, it was announced that Ribbon Communications Inc. (NasdaqGS:RBBN), a developer of real-time, secure and intelligent cloud communication tools for both legacy networks and next-generation mobile and cloud environments, signed an agreement to acquire Edgewater Networks Inc. for $110 million. The deal consists of $50 million in upfront cash consideration, $30 million in deferred cash payments over 18 months, and $30 million in Ribbon common stock issued at closing (not to exceed 5.2 million shares). Of the $30 million deferred consideration, $15 million will be paid 6 months after closing with the remaining $15 million to be paid between 9 and 18 months after closing.

Edgewater reported revenue and adjusted EBITDA of $64.0 million and $4.1 million, respectively, for 2017, translating to an acquisition revenue multiple of 1.72 and EBITDA multiple of 26.83.

California-based Edgewater was founded in 2002 and is a market leading manufacturer of managed service platforms for the delivery of IP-based voice, video, and data services for service providers, small businesses, and large enterprises. Edgewater has approximately 80 employees and has been recording annual double-digit revenue growth over the past 4 years. From 2016 to 2017, Edgewater’s revenue and adjusted EBITDA grew from approximately $50 million to $64 million, and $2 million to $4 million, respectively.

Ribbon expects the acquisition of Edgewater to be immediately accretive to EBITDA and earnings per share. Fritz Hobbs, Ribbon President and CEO, stated, “The combination of Ribbon Communications and Edgewater Networks creates a best-in-breed, complete platform that extends our leadership position in the SBC (Session Border Controllers), cloud unified communication, security and analytics markets.”

Ribbon intends to fund the acquisition through both existing credit facilities and cash-on-hand.

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