REDWOOD SHORES, Calif.-Enterprise broadband service provider iPass Inc. reported plans to purchase Wi-Fi hot spot service aggregator GoRemote Internet Communications Inc. for $76.5 million in cash.
While iPass serves roaming mobile broadband users, such as salespeople and business travelers, GoRemote has focused on remote workers, such as teleworkers, employees in home offices, branch offices and retail locations. The combined company, iPass said, will extend its reach across all the major segments of the global enterprise market for secure Internet for traveling and remote customers.
“Enterprise customers increasingly have been demanding a single source of secure broadband for all their mobile and remote employees worldwide,” said Ken Denman, chairman and chief executive officer of iPass. “As a result of this acquisition, iPass will have the answer with a complete suite of broadband services. The acquisition will position iPass as a leader in the large and rapidly-growing markets for telecommuter and remote office broadband segments as they transition to Internet-based solutions.”
The companies said their management teams are developing an integration plan to take advantage of similarities in their virtual network models, compatible technology platforms and information systems. Tom Thimot, GoRemote’s president and CEO, is expected to lead the iPass sales team as the senior vice president of worldwide sales.
“Enterprises have been making it clear to us that they want financially strong partners with a broader suite of services than we can offer as a standalone company,” Thimot said. “The combined company will be able to offer enterprise customers a seamless ‘best of breed’ software platform supported by iPass’ strong balance sheet, technology and brand.”
IPass said it expects to see significant cost savings and cash flow improvements in GoRemote’s operations. The company said it will eliminate redundant positions and convert GoRemote to its lower-cost infrastructure, systems, architecture and processes. However, iPass said it intends to benefit from GoRemote’s investment in engineering and operations in Bangalore, India.
Under the agreement, iPass will pay $1.71 in cash per share of GoRemote’s outstanding common stock and will pay $3.37 in cash per share of outstanding preferred stock. The company expects to close the acquisition by the end of the first quarter 2006.
IPass’ stock is trading slightly down this morning at $6.88 per share, having closed last Friday at $7.00 per share. The news pushed GoRemote’s stock up to $1.66 per share this morning, having closed last Friday at 1.39 per share.
