On Friday, VoIP pioneer VocalTec Communications Ltd. (Nasdaq:VOCL) announced a merger with private company YMAX Corporation, the creator of magicJack. VocalTec will essentially be absorbed by YMAX, and the merged company will be traded on Nadsaq.
VocalTec was founded in VoIP in 1994, and went public in 1996. The share price skyrocketed following an investment by Deutsche Telekom AG (NYSE: DT; XETRA: DTEG). However, other companies dominated the VoIP market that VocalTec invented, and the company fell by the wayside as a small-cap firm that failed to leverage its status as pioneer.
On news of the merger, VocalTec's share price soared 150% on Friday to $3.28. Trading volume was 40 times the share's daily average. The market cap of $19 million was a two-year high, though still only a fraction of the peak market cap.
Beginning Monday, the merged company will be traded under the symbol "CALL". VocalTec and YMAX estimate the merged enterprise value at $245 million, or at least $17.50 per share. Based the number of shares of the merged company, the market cap would be more than $200 million, reflecting a $20 million value for VocalTec's part.
As part of the deal, VocalTec made a 1-for-5 reverse stock split, reducing the number of shares from 5.9 million to 1.17 million. The company's current shareholders will receive 10% of the merged company's shares. US fund HarbourVest Partners LLC is currently VocalTec's largest shareholder, with a 20.8% holding.
VocalTec said that it expects the merged company to have $110-125 million revenues this year, and to post a profit in the current quarter.
VocalTec president and CEO Ido Gur will manage the merged company's business in Israel. He said, I am excited about the potential to become the worldwide, leading provider of VOIP and softphone applications using SIP. I strongly believe that the synergies enabled by this business combination will allow us to achieve this target."
YMAX CEO Dan Borislow will become CEO of the merged company. He founded the Florida-based company less than three years ago. YMAX is the largest CLEC (Competitive Local Exchange Carrier) in the US. The company's magicJack device connects to telephones or PCs, and can make calls for a fixed annual fee. The company says that it has sold over 6.5 million magicJacks since 2008.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2010
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