M&A Alert - October 27, 2009
AMDOCS Agrees to Acquire jNetX
Transaction Overview
On October 27, 2009, AMDOCS’ (NYSE: DOX) agreed to acquire jNetX for $50mm.
Target Description
jNetX offers a service delivery platform (“SDP”) that enables communication service providers and independent developers to efficiently build and deploy applications (or services as commonly referred to in the communications world) to mobile subscribers. An SPD simply provides a common, and ideally widely used, foundation which frees application developers to focus on the features and function of the application instead of lower level interface and integration elements. For those coming from an enterprise software background, simplistically an SPD could be thought of as the “application server” of communications-centric applications. jNetX’s SDP is designed to allow applications built upon it to operated effectively over both circuit switched (traditional telco) and IP based (internet) networks. jNetX’s customers include 30 major operators including Vonage, British Telecom and Austria’s Mobilkom. Founded in 2001, jNetX is headquartered in Dallas, Texas and has 150 employees and is profitable. jNetX received Series A funding from Mint Capital (Partner: Alistair Stobie) in 2002.
Buyer Description
AMDOCS provides communication service providers with a broad variety of software products enabling client billing/revenue management, customer lifecycle management, services and resources management, operational support, digital goods and services delivery, interactive advertising and user generated content. Jim Liang, EVP Strategy and Corporate Development was the key executive sponsor of the transaction. AMDOCS has approximately 17,000 employees and serves customers in more than 50 countries around the world. Founded in 1988, AMDOCS is based in Chesterfield, Missouri.
AMDOCS has agreed to pay $50mm in cash. Other SDP vendor acquisitions include Drutt by Ericsson in 2007, Hotsip, Portal Software (for $193m at 2.3 multiple) and Net4Call by Oracle in 2006, and Appium and Valista by Aepona in 2007 and 2009 respectively
Strategic Rationale
AMDOC focuses on providing a variety of key “run the business” software products to wireless carriers. jNetX is a natural extension of AMDOCS’ offerings, enabling wireless carriers to efficiently build and deploy increasingly important applications to their customers. Wireless carriers are really good (usually) at providing high quality network transport for voice and data but the real battle in the future is around providing valuable applications to customers. jNetX is an important building block to allow carriers to compete effectively by building compelling and widely used applications. jNetX represents AMDOCS’ third acquisition in the month of October 2009, after Amobee (a mobile advertising company) and Trivnet (a mobile financial services platform).
Architect Partners’ Observations
As noted by Caroline Gabriel of Rethink Wireless, jNetX is one of the few last stand-alone SDP providers that bring important capabilities to bridge between legacy circuit switched networks and IP based networks.