NetComm Wireless Limited (ASX: NTC) and Casa Systems (NASDAQ: CASA) have entered into an agreement where it is proposed that Casa Systems will acquire 100% of the equity interests in NetComm, subject to NetComm shareholder and court approval.
Under the proposal NetComm shareholders will receive cash of A$1.10 per NetComm ordinary share, valuing NetComm at A$161 million. This is a 52.8% premium to the closing price of A$0.72 per share on 20 February 2019, and a 49.8% premium to the 1-month volume weighted average price of A$0.7341 per share.
NetComm would become a wholly-owned subsidiary of Casa Systems and continue operating as the NetComm brand.
NetComm Chairman, Justin Milne, said, “This is an attractive, all-cash transaction. The NetComm Board has unanimously concluded it represents a compelling outcome for our shareholders, customers, suppliers and staff.”
The price is a very tangible measure of the value and quality of NetComm’s telecommunications technology solutions, our position in the global telecommunications industry, and our recent strong performance developing unique 4G and 5G solutions, winning and retaining key contracts. At a significant premium to the current trading price, Casa Systems’ offer provides NetComm shareholders with certainty of value and the opportunity to realise their investment in full for cash.
“NetComm’s customers will benefit from the resultant increase in scale to deploy unique telecommunications technology solutions, as well as a broader product suite and service capability.
“In addition, it is great news for NetComm staff. We believe there will be excellent opportunities for our engineers to be engaged with Casa Systems’ pioneering advanced ultra-broadband 5G solutions for mobile, cable, fixed and converged service providers. Listed on NASDAQ, Casa Systems has revenue of approximately US$300 million and more than 700 employees across 11 countries.”
Casa Systems Chairman and CEO, Jerry Guo, said, “NetComm represents a strong strategic fit for Casa Systems. NetComm is an innovative and agile organisation that has led the global development of fixed wireless and distribution point broadband solutions. We believe that this transaction will create a global leader in the rapidly growing broadband enablement space for service providers across all access technologies. With complementary product portfolios, the combination of Casa Systems and NetComm strengthens our ability to meet the growing demand for increased bandwidth by communications service providers around the world. Moreover, it positions the combined company with a broad, highly competitive product portfolio for new 4G architectures and 5G wireless.
“We see substantial benefits to Casa Systems from this acquisition. It will diversify our revenues both geographically and by product channel. It expands Casa Systems’ customer reach with the addition of several new Tier 1 Global Communications Services Provider customers. It adds fixed wireless products to our portfolio, enabling us to address the large 5G fixed wireless access market. And, it has the potential to deliver meaningful benefits through the merger of two complementary, culturally aligned organisations, with immediate EPS accretion for Casa Systems shareholders.”
The transaction would be funded from Casa Systems’ existing cash on balance sheet, so the proposal would be subject only to approval from the Australian Foreign Investment Review Board (FIRB), court approval and NetComm shareholders which are due to vote on the proposal in June.