Adir, which has a minority investment from networking giant Cisco Systems, is a 9-month-old company that aims to sell software for telecommunications service providers to build Internet-based voice networks. Adir will announce Tuesday that it is buying struggling NetSpeak, which also sells Internet telephony software to carriers.
Adir, a privately owned company, will pay between $3 and $3.10 in cash for all outstanding shares of NetSpeak's stock, giving the deal a value between $46.5 million and $48.2 million. David Greenblatt, president and chief operating officer of Adir, will become the combined company's chief executive, while NetSpeak CEO Mike Rich will become president and chief operating officer. The combined company will consist of about 145 employees.
Netspeak, whose shares closed at $1.90 Monday, lost $3.8 million, or 26 cents a share, on revenue of $2 million for its first quarter ended March 31. If the acquisition is approved by NetSpeak's shareholders, the company will be delisted from the Nasdaq exchange and become part of privately held Adir, an Adir spokeswoman said.
The spokeswoman said the technologies from the two companies complement each other. Adir focuses on the management of Net-based phone networks, while NetSpeak focuses on allowing carriers to offer new services, such as Internet call waiting and virtual private networks, which give businesses inexpensive and secure high-speed connections to their corporate networks over the Internet.
Adir, which spun off from Internet telephony pioneer Net2Phone last September, announced Monday that it secured $25 million in its second round of funding from minority investors Cisco Systems and Softbank Asian Infrastructure fund. Adir, which expects to release its first products by the end of the year, has raised a total of $48 million.
An Adir spokeswoman said the company is not spending any of the $48 million it raised on the Netspeak acquisition. Adir's investors--Net2Phone, Cisco, Softbank--are kicking in $21 million or so to help pay for the acquisition, she said.
The companies involved with the acquisition value Adir at $300 million, sources close to the deal said.