US firm Inter-Tel has completed a US$45m acquisition of Irish networking firm Lake Communications, siliconrepublic.com has learned.
It was reported in January that Inter-Tel’s planned to acquire the Irish company. Arizona-based Inter-Tel revealed yesterday that it had executed an agreement closing the transaction for the purchase of 100pc of the issued share capital of Lake Communications and certain affiliated entities for approximately US$28m, plus an earn out of up to US$17.6m based upon certain targets relating to operating results for Lake Communications over the next 18 months. The transaction was completed after a 60-day closing period.
Dublin-based Lake Communications is a provider of small office converged communications solutions that include data router, firewall, business communication system and voice mail with auto attendant to the under-40 user market. The company designs and develops its products for sale through a distribution network of telecom operators and distributors in Europe and Australia, as well as the EncoreCX product currently being distributed by Inter-Tel in the US.
“Lake Communications has been successful in designing and distributing small office solutions and products both domestically and through international distribution,” stated Jeff Ford, Inter-Tel chief technology officer. “Their products will complement the Inter-Tel product portfolio allowing us to further service our customers.”
“Lake Communications will strive to build our position in the small business market. I anticipate that Inter-Tel’s financial and technological strengths will assist us in the rollout of new products to our customers,” added Anthony Bermingham CEO of Lake Communications.
Lake Communications was established in 1991 following a management buyout by a team led by Bermingham. The company quickly emerged to establish a worldwide reputation in the field of digital signal processor-based modem products geared to companies with up to 40 employees on specific local area networks.
By 2000 the company was tipped for a flotation and was making annual revenues in excess of US$40m and developing products for the lucrative ISDN and DSL markets. Customers included BT, KPN, Motorola, Fujitsu, NEC, Telecom Italia, France Telecom and Eircom. Lake Communications designs and develops its products for sale through a distribution network of telecoms and distributors, including Inter-Tel in the US and outsources its manufacturing to third-party suppliers.
In 1998, Lake Lake Communications acquired network infrastructure firm Topology for around £IR5m. It sold the network integration firm in March 2000 for €30m. It then used the proceeds of this sale to acquire Atlanta-based Home Wireless Networking (HWN) for €10m, bringing its staff levels to 100 people in Dublin, Cambridge, Sligo and Bristol.
It is understood that Lake Lake Communications’ association with Inter-Tel began back in 2001 prior to the HWN acquisition when Lake signed up Inter-Tel as its US distributor.
Last December Lake reported unaudited revenues of approximately US$31m for the year, including approximately US$3m in sales to Inter-Tel. In connection with this transaction, Inter-Tel expects to record an in-process research and development charge of between US$2m and US$4m in the first quarter of 2005 as part of the allocation of the purchase price.
By John Kennedy