Vonage Holdings said today that it has entered into a definitive agreement to acquire privately-held Vocalocity for $130 million, including $105 million in cash and $25 million in Vonage common stock.
As one of the fastest-growing providers in SMB hosted VoIP, Vocalocity, during the first half of 2013, had revenue of $28 million and growing; Vocalocity ended the second quarter with 21,000 customers.
The total SMB market for voice service in North America is $15 billion and 32 million lines. Vocalocity has focused on companies with 20 or fewer employees, which represents more than 60% of the total market. The long-term opportunity for growth in this segment is substantial given that 85% of SMBs still purchase voice service from traditional carriers at rates that are frequently 40-50% higher than those of Vocalocity. The SMB hosted VoIP market is forecast to grow at a compound annual rate of 27.5% over the next 5 years.
"As business VoIP moves from the early adopter phase to the mainstream, a Vocalocity and Vonage combination delivers the scale, quality and feature set to best serve customers and create phenomenal opportunities for growth,” said Wain Kellum, CEO, Vocalocity. I am impressed with what Vonage has built, and look forward to joining the team."
Upon closing, Kellum, will join Vonage as President, Business Services, and become a member of the Company's senior leadership team.
Per the agreement terms, Vocalocity shareholders will receive $105 million in cash and $25 million in Vonage common stock for total consideration of $130 million, subject to customary closing adjustments. The transaction is expected to close in the fourth quarter of 2013.
“This deal should be done by the end of the year, and after that it will be interesting to see what Vonage does differently in the space,” said wireless analyst Jeff Kagan. “There is a large opportunity and they are in a good position so far. However with competitors like RingCentral and others, I expect this segment to start getting very interesting to watch. Stay tuned.”
Vocalocity is attending and exhibiting at SMB Nation's Fall Conference...we will be sure to see if they are able to comment on this news, and will get back to you on this!
