magicJack VocalTec Ltd (NASDAQ:CALL)
The pioneer of Voice over the Internet Protocol (VOIP) magicJack VocalTec Ltd (NASDAQ:CALL) is being acquired by B. Riley Financial, Inc., a diversified financial services company, for $8.71 per share.
The deal represents a 23% premium over CALL’s 90-day average price and is worth approximately $143 million. Observers believe that magicJack will be held by B. Riley’s subsidiary B. Riley Principal Investments, LLC – the entity that owns United Online, Inc., a complementary telecommunications company.
Bryant Riley, Chairman and CEO of B. Riley, said, “Investments such as this one are the key reason we formed our Principal Investments group. We believe that magicJack is representative of the type of proprietary investment with attractive return characteristics that are often overlooked by others, but where we are uniquely qualified to leverage our balance sheet and comprehensive platform in order to maximize the investment potential. Once fully integrated, we expect magicJack to generate a meaningful contribution to B. Riley’s cash flow and, consistent with our policy of returning capital to shareholders, lead to increased dividends for our shareholders in the future.”
MagicJack VocalTec Ltd (NASDAQ:CALL) has sold more than 11 million magicJack devices, now in their fifth generation, has millions of downloads of its calling apps, and holds more than 30 technology patents. magicJack VocalTec Ltd (NASDAQ:CALL) is the largest-reaching CLEC (Competitive Local Exchange Carrier) in the United States in terms of area codes available and number of states in which it is certified.
CALL Stock Performance
CALL shareholders can breathe a sigh of relief. Sales had been declining for years before this merger. In 2012, sales were at $158.4 million but steadily declined and in 2016 were posted at only $97.4 million. Despite a contraction in the number of outstanding shares, earnings suffered as well. In 2013 a shareholder’s EPS was $3.81. That number shrank year after year, and in 2016 was $$0.36.
Accordingly, CALL stock was trading at 52-week lows (just above $5.50) when the deal was announced. The deal’s price of $8.71 revisits prices last seen six months ago – before the shares began a steady slide.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.