EAS Group Inc., the privately held parent of Excel Switching Corp., has acquired Brooktrout Inc., a provider of VoIP hardware and software subsystems, including IP fax products.
Excel is a provider of VoIP platforms such as softswitches, media gateways and media servers.
Under the terms of the agreement, Brooktrout stockholders will receive $13.05 in cash for each share of Brooktrout common stock (representing a 38 percent premium over the closing price of Brooktrout common stock on Aug. 17, 2005). The total amount to be paid to Brooktrout stockholders comes to approximately $173 million.
“When we bought Excel back from Lucent (Technologies Inc.), the thought process was build or buy enabling technology to serve the OEM community,” says J.C. Murphy, president of Excel. “That is what Brooktrout does as well. So this broadens the types of technology that we can deliver to OEMs serving service providers.”
In addition, Murphy says, Brooktrout’s product line opens an entirely new market: the enterprise. “We kept seeing that IP is the least common denominator for technology requirements across the Fortune 1000 for voice and data infrastructure and what service providers [are] needing,” Murphy says. “To take advantage of this phenomenon was to buy a company that is a leader in providing enterprise products. Brooktrout is known in fax server and storage. So we are buying a key technology and a channel on the enterprise front.”
Adding Brooktrout’s media server capability, from its acquisition of Snowshore in June 2004, also was a key part of the strategy. “We launched a media gateway using a lot of the IP capability in pure core platform, and adding SS7 capability,” Murphy says. “Brooktrout also had a software media server that complements our media gateway technology. So we have a broader complement of products to serve the enterprise space and the carrier space as well.”
The media server is attractive because the “biggest uptick in our business is the announcement applications that are running on DSPs in our platform. IVR consolidation has been a big winner for us, dealing with network announcements over IP networks,” says Murphy.
Excel did a four-month evaluation of Brooktrout’s technologies and found an overlap of less than 10 percent with its own product line. In markets, 80 percent of Brooktrout’s revenue is from the enterprise compared to just 10 percent for Excel. Also, 70 percent of Brooktrout’s sales are in North America, while just 33 percent of Excel’s sales are in that region. “We have distribution in Asia Pacific that is right for the Brooktrout product line,” Murphy says.
