Tekelec and GENBAND Inc. (GENBAND) have entered into a definitive agreement for the purchase by GENBAND of Tekelec's Switching Solutions Group (SSG). The transaction is expected to close during April 2007, and is subject to customary approvals and closing conditions.
The transaction is structured as a sale of Tekelec’s equity interests in Santera Systems LLC and Taqua Inc. and the SSG business assets held by Tekelec in exchange for a 19.9 percent common equity interest in GENBAND, $1.0 million in cash and GENBAND’s assumption of certain SSG liabilities. Twenty-five percent of the equity issuable at closing will be held in escrow for one year pending the expiration of the indemnity period. Tekelec will have no operational role in GENBAND and will account for its investment under the cost method of accounting.
Tekelec has approximately 465 employees directly and indirectly associated with SSG. The majority of these employees will transfer to GENBAND, and the remainder will be terminated in a restructuring at the time of closing. The loss on this disposition includes estimated pre-tax restructuring charges of approximately $18 million to $20 million for personnel and facility consolidation costs related to sale of the SSG business.
Frank Plastina, president and CEO of Tekelec, said, "We are satisfied with this transaction and our opportunity to become a shareholder in GENBAND. Our SSG customers will benefit from working with GENBAND given its experience in the VoIP marketplace and its capabilities in supporting Tier 1 service providers. Our shareholders will benefit from Tekelec’s increased investment focus on signaling and session control opportunities."
Charles D. Vogt, president and CEO of GENBAND, stated, "The combination of the two companies creates an enviable gateway and applications product portfolio and enables GENBAND to strengthen our relationship with our existing customers and business partners."
TekelecGENBAND
