TPx Communications To Go Public Via A $343 Million Acquisition
Service provider TPx Communications, formerly known as TelePacific Communications, is going public as part of a complex deal involving a special purpose acquisition company.
Los Angeles-based TPx has teamed up with special purpose acquisition company Pensare Acquisition Corp., which will help TPx become a Nasdaq-listed public company. The transaction values the combined companies at approximately $1.1 billion, according to the two companies.
The new company will be known as TPx Corp., and will be listed as "TPXC" on the Nasdaq.
As part of the deal, Pensare will pay $248 million in cash and $95 million in Pensare equity to TPx shareholders. At the same time, some institutional investors are expected to purchase equity in the combined entity via a proposed private placement. The net cash proceeds are expected to be used to reduce TPx’s current net debt, fund its growth plan and allow TPx to pursue "opportunistic acquisitions," the two companies said. The deal has already been approved by each company's board of directors.
TPx's current CEO, Richard Jalkut, and CFO Tim Medina will continue at the helm of the combined company. Pensare's CEO, Darrell Mays, will serve as vice chairman of the combined company’s board of directors. TPx’s current controlling stockholders, including its largest stockholder, Investcorp, will remain as equity holders in the soon-to-be combined entity, according to the two companies.
“We are excited to partner with Pensare to seek to accelerate our current growth and leverage their collective domain expertise and experience in the [technology, media and telecom] TMT industry. In addition, with access to new sources of capital and liquidity, we believe that TPx will be able to accelerate our historical growth and provide even greater value to our shareholders, employees and customers," Jalkut said in a statement on the deal.
Founded in 1998, telecom service provider TPx has shifted its focus in recent years to managed IT services generating monthly recurring revenue, including Unified Communications as a Service (UCaaS), cloud connectivity, SD-WAN, and managed security.
TPx has been recently investing in its growth through solution providers. Today, the company does about half of its business through the channel. TPx last year brought on telecom channel veteran Greg Iuzzolino as director of national channel development, among more than two dozen new channel managers that joined the company since 2017, the company told CRN at the time.
The provider is no stranger to M&A. TPx has acquired nine companies since 2004, including national managed services provider DSCI in 2016, Orange County Internet Xchange in May 2011, Covad Wireless from business telecom provider MegaPath in 2010, and Sacramento-based 01 Communications Inc.'s retail customer business and its Sacramento data center in 2010.
“This transaction provides TPx with an opportunity to strengthen its leadership position and capture more share of the fast-growing [UC] and cloud focused managed IT markets. We are thrilled to help facilitate TPx’s listing on Nasdaq and excited to partner with [Jalkut] and the entire TPx team," Pensare's Mays said in a statement.