Top Stories of 2009: Acquisitions - VoIP on Sale

Despite the economy, the VoIP and UC market had a few big buys. Some were fraught with negotiation, litigation or last minute actors swooping in from nowhere. Here are a few notable deals worth noting in 2009:

Avaya buys Nortel ES - In June, Nortel began selling off its various units and it was only a matter of time before companies began stalking its VoIP assets. Initially, analysts saw Nokia Siemens Networks, Sonus and Avaya as all logical bidders for Nortel's VoIP assets [1]. Although rumors swirled that these would all be potential bidders (Analyst maintains Sonus will bid on Nortel's VoIP business) [2], only Avaya really came out with a bid. Avaya's opening bid for Nortel's Enterprise Solutions Division of $475 million was announced July 20 [3]. Some thought more players would step up, but on Siemens Enterprise Solutions seemed to have made any challenging bids. Someone must have been bidding up the price, however, because Avaya eventually bought Nortel ES for $915M. [4] Hopes of ending the auction began to suffer from regulations and protests with Verizon leading the charge to block Avaya's bid. [5] Luckily a Judge rejected Verizon's challenge to Avaya-Nortel ES and Ok'd the deal [6] and the deal cleared a number of governmental hurdles. [7] The deal finally went through just days ago. Read more in "It's official - Avaya now owns Nortel ES [8]."

Google buys Gizmo5 - Early into the year Gizmo5 was doing its mating dance to be acquired. Back in February the company deployed a way to gateway between its service and Skype called OpenSky, which allows SIP calls to be forwarded to Skype addresses through Gizmo5. The funny thing was when they launched the service they put a disclaimer at the bottom of their website: "OpenSky is NOT a service endorsed by Skype/Ebay but they should because it means even more Skype usage." Might as well have said BUY US!! (Read Gizmo5 builds (yet another) bridge to Skype [9] for more on that.) And that almost did happen when Skype's founders and their company Joltid filed a lawsuit against Skype which would take away the essential software to run Skype. Skype thought about buying peer-to-peer VoIP startup Gizmo5 [10] because it had a built-in user base and its software could replace the underlying framework of Skype. When Skype made a deal with their co-founders though, Gizmo5 was left in the wind. Then out of nowhere Google acquires Gizmo5, instead for $30 million [11]. This move sent ripples through the online VoIP community as it meant Google was getting serious about VoIP. [12]

Skype founders buy Skype - First Skype founders wanted to buy back company from eBay [13]. But they didn't have enough capital until they started going to private equity companies in April and even then the bid was too low apparently. At the same time eBay began planning a 2010 IPO for Skype [14] which the founders made moves to block legally. In August, Andreessen Horowitz, Netscape founder Mark Andreessen's investment firm was working with other firms to raise $2 billion to purchase Skype. The move was again blocked by a legal challenge from the co-founders [15]. After blocking certain parties from purchasing Skype in the original deal the Skype founders were able to join the investors and buy back 14% [16]and join the board of the company. The final deal was valued at $2.75 billion and sold a share to an investor group led by Silver Lake Investment group including Joltid Ltd. (the founders of Skype) and affiliates like Canada Pension Plan and Andreessen Horowitz. The deal gave the new investors 70 percent of the company while eBay will retain the remaining 30 percent. Read the final details in "eBay completes sale of Skype." [17]

Acme Packet buys Covergence - Acme Packet announced in April it bought Covergence in a deal valued at roughly $22.8 million. Covergence provided software-based session border controllers for VoIP and UC to large enterprises. Acme Packet CEO Andy Ory said the Covergence acquisition fulfills his company's need for SIP trunking in their border control offerings. [18]

KPN buys iBasis - KPN's takeover of iBasis seems like one of the more hostile purchases this year, although somewhat similar to Skype with all the litigation. Royal KPN N.V. saw the acquisition of its remaining stake in wholesale voice provider iBasis as an expansion opportunity too good to pass up--getting a wholesale provider of international long distance telephony and retail prepaid calling services for mobile operators. The two companies had merged in 2007, but KPN did not own iBasis outright [19]. The offer was rejected with iBasis launching a complaint in the court to halt what it said was a "grossly inadequate" offer [20]. KPN upped the ante to purchase rest of iBasis moving the bid from $1.55 to $2.25 per share. [21] This was rejected again so KPN made a final offer on iBasis of $3 a share [22]. The $3 offer was the sweet spot and KPN is reportedly closing the deal for iBasis. [23]

Cisco buys Tandberg - Cisco Systems was reported to have bought Tandberg, [24] the video conferencing equipment manufacturer, for $3 billion, according in October. The move enabled Cisco to grab some more video technology, which it has moved aggressively to bring in house. No so fast though as Tandberg shareholders drove a hard bargain and rejected the initial offer [25]! Cisco then threatened to drop the Tandberg bid altogether in order to be fiscally prudent. [26] After toying with the idea of walking away from the table, the networking giant raised the offer from $3 billion to $3.4 billion [27]--an offer that Tandberg CEO encouraged shareholders to take. In the eleventh hour, they were able to get 89.1 percent of Tandberg shareholders to agree to their $3.4 billion buyout offer [28]. They needed 90 percent but combined with Cisco's 2 percent share of the company already, they had enough.

More - In June, Jaxtr was bought [29] by SabSe Technologies and Natural Convergence announced it was buying NewStep Networks [30] for its FMC technology. In May Avaya purchased [31] contact center software maker Agile and Voxeo bought IMified [32] for its IM API.