Communications-as-a-Service (“CaaS”) company Sangoma Technologies today announced it has entered into a stock purchase agreement to acquire leading UCaaS company StarBlue Inc. (dba Star2Star Communications). Pursuant to the merger agreement, Sangoma will acquire Star2Star for approximately $437 million, consisting of $105 million in cash and 110 million common shares of Sangoma. The transaction is subject to approval by Sangoma shareholders at a meeting expected to be held in late March or early April of this year.
According to the companies, the deal creates full-spectrum, cloud-native communications services organization, with a combined revenue approaching $250 million, that meets customers’ growing demand for a “one-stop-shop” solution for all unified communications needs in multiple deployment environments, including on-premises, cloud, and hybrid.
Based in Sarasota, Fla., Star2Star’s offerings include a comprehensive suite of voice, contact center, collaboration, integration, video meetings, communications platform as a service (CPaaS), and desktop as a service solution that work on any device, accessible from anywhere. For the trailing 12 months ended September 30, 2020, Star2Star generated approximately US$79.4 million on an unaudited basis, over 80% of which was recurring. Also as of September 30, 2020, Star2Star had total assets of US$35.2 million and liabilities of $80.9 US$60.6 million.
“Customers today are demanding an integrated buying experience for all their communications needs and the combination of Sangoma and Star2Star will satisfy that need with the broadest set of cloud-native CaaS and related solutions in the industry,” said Bill Wignall, president and CEO of Sangoma.
“This transaction ensures we can meet any customer’s preference, be it for purely cloud solutions, or for on-premises deployments, or a hybrid combination, all the way from small businesses to large enterprises. For many years, we have consciously pursued a strategy to transform Sangoma from a product business to one of the communications industry’s leading SaaS companies. This deal is incredibly exciting not only because it will generate scale in a growing, consolidating space, but also because by combining with Star2Star we will have completed our long-term evolution into a leading cloud services company, one with annual revenue approaching $250 million.”
Sangoma believes the deal completes is transition from a pureplay, one-time sales hardware company, to a software and services business with a recurring revenue model. Pro-forma recurring services revenue would account for approximately 70% of total revenue (trailing 12-months as of September 30, 2020), positioning Sangoma amongst its top-tier peers.
“We are thrilled to combine forces with Sangoma because we have so many complementary strengths,” said Norman Worthington, founder and CEO at Star2Star. “Sangoma was the perfect fit for us because they identified and appreciated our talented team, loyal customers, and unique go to market approach. Star2Star has a differentiated channel approach, employing over 650 active partners across multiple types of channels, from resellers and interconnects, to managed services providers and enterprise technology partners to wholesale and white label distributors. Finally, I’ve come to genuinely appreciate Bill’s vision for our combined companies. We share a view on how to profitably grow in this exciting market, a viewpoint that’s unique in our industry.”
While Star2Star has focused exclusively on the U.S. market, the combination will enable Sangoma to deploy Star2Star’s cloud solutions to its global customer base in more than 100 countries, where cloud native solutions are relatively under penetrated and less competitive, said the companies.