ADIR acquires NetSpeak

ADIR VoIP Technologies, the Net2Phone spin-off, said today that it would acquire NetSpeak for between $46.5 and $48.2 million in cash.

The deal is being funded in part by $21 million from Cisco Systems, Net2Phone and Softbank. Yesterday, in a separate announcement, ADIR said it had raised $25 million in second-round funding from Cisco and Softbank.

Under terms of the merger agreement, privately held ADIR will pay between $3 and $3.10 per share for all 15.5 million outstanding shares of NetSpeak. NetSpeak shares closed yesterday at $1.90 but jumped to $2.70 by early afternoon.

Combined, the two companies will supply network management, call-control and application software for voice over IP (VoIP) networks run by carriers of all sizes.

“ADIR’s focus has been large telcos primarily from the network management challenge,” said David Greenblatt, president and COO of ADIR. “The kind of traffic Net2Phone has. We were young though and we had not yet delivered the whole software delivery structure. You still need training, you need three levels of support, you need a whole world of software support. [NetSpeak] had done this. They have a different solution for a different scale.”

Greenblatt will take on the CEO role of ADIR while Mike Rich, currently CEO of NetSpeak, will be named president and COO of ADIR.

The two companies also have close ties to Cisco. Both are members of the Cisco Service Provider Solutions Ecosystem partner program.

For NetSpeak, the acquisition comes after one of the most difficult financial periods in the company’s history. In it’s last quarterly report, NetSpeak reported a net loss of $3.8 million, with about 80% of its revenue coming from a single customer, Motorola. The acquisition could mean an end to NetSpeak’s OEM activity, which accounted for about 40% of its revenue last year.

“It something that we haven’t reached a firm decision on that yet,” said Rich. “The question is what is our business model? Right now I’m thinking more direct sales.”