SpectraLink to acquire Danish DECT vendor

SpectraLink Corp., the pioneer of VoIP over Wi-Fi that has been instrumental in popularizing the technology in vertical markets, has announced a definitive agreement to acquire KIRK telecom, a competing vendor of DECT and other technologies that is based in Denmark.

Under the terms of the agreement, SpectraLink will pay about $61.3 million in cash to purchase all the stock of KIRK from its stockholders. The transaction is subject to the completion of a number of conditions, though SpectraLink said it is expected to close Jan. 3, 2006.

The deal will significantly increase SpectraLink's international reach by augmenting its distribution channels and geographical market penetration. "Strategically, we've said for many years we want to be a global company," said John Elms, president and CEO of SpectraLink, on a conference call announcing the deal this morning. SpectraLink currently gets only about 6% of its revenue from international contracts. "We saw this as a very practical way for us to realize that goal of getting more revenues from international source to reach parity," Elms added.

KIRK will become a SpectraLink company while continuing to do business under the KIRK name, the companies said. DECT is a long-standing technology that has been popular primarily in Europe and the Asia-Pacific Rim region, while seeing limited deployment in North America. However, the SpectraLink and KIRK see new growth potential for DECT in North America as a result of regulatory changes made by the Federal Communications Commission earlier this year facilitating the sale of DECT products in the U.S. market.

SpectraLink obtained combined debt financing of $40 million in the form of a three-year term loan and revolving credit line in order to accomplish the acquisition. The company will use a combination of debt and up to $30 million of its own cash to acquire all of the outstanding shares of KIRK. Much of the senior management of KIRK will be joining SpectraLink, though Peter Skov, managing director at KIRK, will step down from his position. He'll report to Elms as a consultant during the integration of the two companies, Elms said.

KIRK is currently privately owned, with Skov and other executives owning 55% of the company. KIRK's revenue grew 17% between 2004 and 2005, and the company had recently begun to penetrate SpectraLink's core U.S. market. The Danish company also had been developing a Wi-Fi product, and Elms said the combined company will begin to figure out what will become of that development.