NEW YORK-Due to stock price declines, World Access Inc., an Atlanta-based maker of telecommunications switching, transport and access products, announced Oct. 13 it had lowered substantially its bid to acquire Telco Systems Inc.
In early June, World Access said it would pay $17 per share, all in stock, to purchase Telco Systems, a Norwood, Mass., integrated access solutions provider. The amended agreement, subject to approval by both companies’ boards of directors and shareholders, would set a minimum price of $12 per share.
This would represent a decrease in the acquisition price to about $133 million from approximately $187 million under the original offer, announced June 4.
“The amendment to the merger agreement is in response to the recent decline in trading prices of both World Access’ and Telco Systems’ common stock, despite continued positive trends reported by both companies,” said Steven A. Odum, chairman and chief executive officer of World Access.
World Access stock, which trades on Nasdaq, had declined in value by more than 50 percent between early June and early October. At the close of the trading day, Oct. 13, World Access stock had risen by $1.69 to $15.31. Shares of Telco Systems, which also trades on Nasdaq, closed at $9.87, up $3.50.
If World Access’ stock price dips below $12, World Access has the option to terminate its acquisition offer.
“We view the merger with Telco Systems as a key element of our long-term strategy and are excited about the proprietary technology, advanced product offerings, strong customer relationships and management experience that Telco Systems will bring to World Access,” Odum said.
The amended agreement announced Oct. 13 also would give World Access the option to pay for the purchase with a combination of its common stock and cash. However, World Access said it must pay at least 45 percent of the purchase price with its own stock “to ensure tax-free treatment to Telco Systems shareholders in respect of World Access common stock they receive.”
“We are pleased by this amendment to our merger agreement with World Access as a response to market conditions,” said William B. Smith, president and chief executive officer of Telco Systems.
“With this agreement for a minimum price for our shareholders removing uncertainty related to the merger, we stand ready to continue with the integration process, which already has uncovered a number of opportunities based on the synergy between our two companies.”
