Technology continues to boom in Cambridge with the latest success story scooped by global billing services company, Convergys Corporation. Cambridge-based international provider of convergent billing software, Geneva Technology has merged with Convergys in an all-share deal worth $692 million.
The merger provides an exit for venture capital investors Spectrum Equity Investors and Geocapital Partners, who in December 1999 took part in a $20 million financing round, acquiring a 25% share in the business. Spectrum committed $12 million, Geocapital invested $7.5 million and Geneva Technology management put in the remaining $0.5 million. The investment was to help enable Geneva Technology to accelerate its planned expansion into new target markets.
Michael Kennealy, general partner at Spectrum Equity Investors said that the financing was an interesting first round given that at the time of investment, Geneva Technology was already 10 years old and until then had been totally self-financed. He added that it was in no way an early stage first round and the company was already pretty mature with around $15 million of revenue at the time. There were no further funding rounds.
Following a definitive agreement signed on 5 March, Geneva Technology shareholders and option holders will receive a fixed total of approximately 17.6 million Convergys shares and options valued at $692.57 million in exchange for all the outstanding shares and options of Geneva Technology. The consideration shares were valued based on Convergys’ closing stock price of $39.35 on 5 March, the last full trading day prior to the announcement.
The transaction will be a tax-free, stock-for-stock exchange and is not subject to any pre- or post-closing adjustments. The merger is subject to customary closing conditions and regulatory approval and is expected to close in April.
The deal is expected to add incremental revenues of at least $70 million, $125 million and $210 million in 2001, 2002 and 2002 respectively. Based on stand-alone growth assumptions for Geneva Technology, this transaction may dilute earnings per share by as much as $0.15 and $0.11 in 2001 and 2002 respectively.
Stephen Edwards, founder, chairman and chief technical officer of Geneva Technology, said: “This merger will allow us to grow both the existing Geneva and Convergys businesses faster by using each other’s strengths. I believe that this deal creates a leading global company in the communications-based billing market.”
Geneva Technology provides convergent billing software for the telecommunications, IP/Internet, utilities and on-line services marketplaces. The company’s product, Geneva is a Carrier Grade Real-TimeTM, transaction based rating and billing system that offers the performance required by major carriers handling large volumes of data. The Geneva product will continue to be offered as a standalone solution as well as part of broader Convergys solutions.
In addition to its Cambridge, UK headquarters the company has offices in Frankfurt, Madrid, Paris, and Washington, D.C.