TNS yesterday announced it has entered into a definitive agreement to acquire Cequint, the private Seattle-based company that provides carrier-grade caller ID products and services to U.S.-based mobile operators.
The purchase price includes an initial payment of about $50 million, subject to normal working capital and other adjustments, consisting of about $46.7 million in cash and about $3.3 million in stock issued to certain Cequint executives. There's also a potential additional $62.5 million in cash for the achievement of future unspecified performance-based targets, for a potential total of $112.5 million.
The deal means everyone at Cequint keeps their jobs, including the top executives, who will remain in Seattle. TNS is based in Reston, Va. In fact, Cequint, which employs close to 70, is in hiring mode – a nice place to be these days.
Cequint CEO Rick Hennessey says a few companies expressed interest in Cequint when it started a recent round of fundraising. But it already was a partner with TNS and the combination made perfect sense.
"One of the concerns we had initially was we actually enjoy bringing innovation to our carrier partners. We have fun doing that," he says, adding TNS recognized that. "Not only are we being acquired but they will continue to invest and make sure it grows, and that was a big key to this as well."
Cequint's City ID displays the city and state of incoming numbers to help indentify unknown callers. It's usually offered first as a free trial, and after that, customers have the option to pay $1.99 a month to keep it. Cequint also is in the process of integrating its second-generation enhanced Caller ID service with mobile operators and device manufacturers, which includes the delivery of caller name and additional features.
In a press release, TNS CEO Henry H. Graham Jr. said the combination of TNS' carrier-grade network and identity and verification platform with Cequint will provide a "very powerful offering" that will extend TNS' operator partnerships and enhance its ability to help customers generate additional revenue.
Industry analyst Iain Gillott, president of iGR, says the pairing of Cequint's handset software and carrier relationships along with TNS' line information database (LIDB) is unique and will be tough for others to replicate. It will allow them to offer a complete caller ID solution on cell phones. The key is the LIDB access – rather than rely on third parties, they have access to accurate name/caller ID data, so TNS should be able to leverage that with Cequint's carrier relationships.
Hennessey admits the city or caller ID types of services are not necessarily the most sexy, yet they produce revenue for carriers and a value for their customers. AT&T, Verizon Wireless, U.S. Cellular and Alltel are among the carriers offering City ID. Several unannounced carriers are implementing the name ID product. Cequint's services are usually offered on a white-label basis so consumers don't see its name behind the products.
Hennessey didn't go into detail about some of the new features in the works for the coming year, but he says they'll be "a lot of fun for people to use."
The boards of directors of both companies have approved the acquisition. The transaction is expected to close early in the fourth quarter.