Vonage (NYSE: VG) has agreed to pay $130 million for VOIP provider Vocalocity, which is focused on the small and medium business market. The deal will include $105 million in cash and $25 million in Vonage stock and is likely to close in the fourth quarter.
Vocalocity ended the second quarter with about 21,000 subscribers and reported a revenue of $28 million in the first half of 2013, which was 39 percent higher than the same period in 2012.
According to Vonage the SMB segment for voice service in North America is a $15 billion market. Vocalocity focuses primarily on companies with 20 or fewer employees, which represents about 60 percent of the market. The SMB hosted VOIP market is forecast to grow at an annual rate of about 27.5 percent over the next five years, according to Frost & Sullivan.
Wain Kellum, Vocalocity's CEO, will join Vonage as president, business services, when the deal closes.
Vonage said it expects to have some synergies from the acquisition, which will be recurring and in the high single-digit million dollar range. The synergies will be realized starting in 2015.
Earlier this summer Vonage unveiled a new national marketing campaign intended to highlight Vonage's attempts to disrupt the telecom ecosystem with low-cost service.
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Updated article on Oct. 23 with correct name of company in the headline.