Leading hosted UCaaS provider for medium-to-large enterprise customersHighly profitable operations with 30%+ Operating and 35%+ EBITDA margins in 2015 Forecasting 20%+ year-over-year growth in sales in 2016Purchase price of $40 million, consisting of $38 million in cash and $2 million of stockTwo founders to remain with the business as CEO and President, respectivelyWEST PALM BEACH, Fla. and NETANYA, Israel, March 15, 2016 (GLOBE NEWSWIRE) -- magicJack VocalTec Ltd. (Nasdaq:CALL), a leading VoIP cloud-based communications company, today announced that it has entered into an agreement to acquire substantially all of the assets of North American Telecommunications Corporation d/b/a Broadsmart, a leading hosted UCaaS provider for medium-to-large multi-location enterprise customers. The purchase price for the acquisition is $40 million, consisting of $38 million in cash and $2 million in ordinary shares of magicJack. There is also a $2 million earn out tied to the achievement of 2016 revenues of $15.6 million. The acquisition is expected to close in the next 30 days. Broadsmart has a track record of designing, provisioning and delivering complex Unified Communication as a Service (UCaaS) solutions to blue chip corporate customers on a nationwide basis. It has expertise in servicing enterprises with hundreds-to-thousands of locations. The business is highly profitable, having generated approximately $13 million in revenues and $4.6 million of EBITDA in 2015, an EBITDA margin of over 35% on an unaudited basis. For 2016, the Broadsmart business is forecasting over 20% year-over-year growth in sales. The two founders of Broadsmart, Todd Correll and Tom Tharrington, will remain with the business as CEO and President, respectively, of Broadsmart Global, Inc., a newly formed wholly-owned subsidiary of magicJack Vocaltec, Ltd. At the time of the closing, the Broadsmart founders also will each receive 500,000 stock options, 50% of which will vest in even annual increments over the next three-year period if the founders remain employed with the company as of each respective vesting date, and 50% of which will vest over the next three-year period if the company achieves designated revenue and EBITDA targets. The options will be issued to the Broadsmart founders outside of the Company’s 2013 Stock Incentive Plan as an inducement award in accordance with NASDAQ Stock Market Rule 5635(c)(4). “We are pleased to be diversifying beyond our core business into UCaaS targeting high end SMB and enterprise customers,” said Gerald Vento, President and CEO of magicJack VocalTec, Ltd. “Todd and Tom are exceptional entrepreneurs that have built a highly profitable and fast growing business. They have demonstrated that they know how to sell and service large enterprise customers with complex needs at thousands of locations in multiple geographies. We intend to fully support them in maximizing their promising pipeline for new business. We also look forward to exploring opportunities for Broadsmart to realize synergies by leveraging magicJack’s proprietary low cost infrastructure.” ‘’We are excited to be combining Broadsmart with magicJack VocalTec,” said Todd Correll, Broadsmart’s CEO. “It will provide us greater resources to deliver additional managed services and solutions to our customers and channel partners. Tom and I look forward to providing the same high quality, high touch customer service that Broadsmart’s customer base has come to expect from the company.” Oppenheimer & Co. Inc. provided certain financial advisory services to magicJack VocalTec Ltd. in connection with the transaction. Q Advisors, a leading global TMT investment banking boutique, acted as exclusive financial advisor to Broadsmart in connection with the transaction. Akerman LLP acted as legal counsel to magicJack. Kelley Drye & Warren LLP acted as legal counsel to Broadsmart. magicJack intends to file a Form 8-K with a
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