M&A Alert - March 25, 2010
AMDOCS’ OpenMarket Acquires MX Telecom
Transaction Overview
On March 23rd, 2010, AMDOCS (NYSE: DOX) agreed to acquire MX Telecom for $104mm.
Target Description
MX Telecom is a multi-network gateway and aggregator for SMS, MMS, IVR (Interactive Voice Response), Video Short Codes, as well as Internet and TV related services. MX Telecom also offers mobile billing management services and mobile content management systems for web-based applications and SMS call centers and chat applications. Clients include O2, Orange, Billboard, Amazon.com, BBC and The Sun. Founded in 2000, MX Telecom is based in London, U.K.
Buyer Description
OpenMarket, a Business Unit within AMDOCS Interactive, offers SMS and MMS gateway aggregator services as well as mobile marketing content management, campaign creation and billing services, which include SMS Alerts, Shortcode, Voice and click-to-call services. OpenMarket was a subsidiary of QPass prior to being acquired by AMDOCS in 2006. AMDOCS Interactive, the Business Unit sponsoring the transaction, enables service providers to offer targeted digital advertising services via personalized search and mobile portals and offers an application store platform. The parent company, AMDOCS, provides communication service providers with a broad variety of software products enabling client billing/revenue management, customer lifecycle management and mobile service delivery and resource management. AMDOCS also provides interactive advertising enabling local directory publishers to launch internet and mobile local / Yellow-Pages based advertising campaigns via channels such as locally-targeted SMS Alerts, coupons and online/web advertising. Jay Emmet, GM of OpenMarket and Brian Shepherd, President of AMDOCS Interactive, were the key executive sponsors 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 $104mm in cash. Although MX Telecom does not report financial information, MX Telecom was mentioned as the 80th fastest growing private firm in Britain, with a 2006 profit of £6.4 mm (approximately $12.5mm based on 2006 currency conversion).
Strategic Rationale
As announced by AMDOCS, MX Telecom will extend AMDOCS’ OpenMarket’s SMS gateway/aggregator and mobile payment service offerings, particularly internationally, given MX Telecom’s UK base. Furthermore, MX Telecom’s extensive SMS and mobile marketing capabilities will bolster AMDOCS’ mobile marketing services offerings to service providers, which are now offered via OpenMarket and AMDOCS Interactive.
Architect Partners’ Observations
AMDOCS’ recent acquisitions have clearly shown their transparent move to provide service providers with not only core aggregator, billing and service delivery infrastructure, but also higher-level mobile marketing services, which include SMS advertising services as well as local mobile advertising, both of which AMDOCS currently offers. It is not surprising that service providers are eyeing the mobile advertising industry, given its dynamic growth. According to JP Morgan, mobile messaging advertising is forecast to grow from $2.3b in 2009 to $5b in 2013, representing a new multi-billion dollar market opportunity.