Vertical Expands Reach into North American SMB Market with Completion of Vodavi Acquisition

By Mae Kowalke

TMCnet Associate Editor

 

Next-generation IP network company Vertical Communications (News - Alert) announced Monday it completed the acquisition of communications solutions provider Vodavi Technology, for $31.1 million.

 

The deal was announced Oct. 18. To finance the acquisition, Vertical raised $27 million by issuing convertible preferred stocks, and also secured debt financing of up to $30 million.

 

Trading of Vodavi’s stocks on the NASDAQ now has been suspended.

 

In its announcement about the deal, Vertical said acquisition will enhance its ability to serve the North American small to medium-sized business (SMB) market.

 

“We are pleased to complete the Vodavi acquisition and we look forward to working with our expanded base of employees and dealers in maximizing the benefits of this transaction,” said Bill Tauscher, Chairman and Chief Executive Officer.

 

“The Vodavi acquisition substantially ratchets up our combined research and development footprint and should allow us to more rapidly bring innovative product solutions and enhancements to market,” Vertical CEO Bill Tauscher said, in a statement.

 

Tauscher continued: “Additionally, the improved financial strength of the Company resulting from our recent financing transactions benefits both dealers and their end customers.”

 

Vertical is gaining more than just Vodavi with the acquisition—the purchase also includes a strategic business relationship with LG-Nortel (News - Alert) Co., Ltd (LGN), formerly Vodavi’s largest shareholder and presently its primarily partner for product development and manufacturing.

 

It should be noted that Vertical itself was formed by the combination of three other companies: Artisoft in 2004 acquired Vertical Networks and changed the company’s name to Vertical Communications, then expanded by acquiring Comdial in 2005.

 

Vertical now boasts more than 300 employees in six U.S. and European locations, serving more than 200,000 customers and a distribution channel consisting of 2,000-plus value-added resellers, distributors and system integrators.

 

Data on Yahoo! Finance Monday evening showed Vertical Communications stocks trading at $0.90, up 5 cents (5.88 percent) from previous close of $0.85.

 

 

Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.