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Fusion Closes PingTone Purchase

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Q3 2014.**

New York-based Fusion has closed on its purchase of Virginia-headquartered PingTone Communications, and says one of the acquisition’s benefits is the addition of “a successful direct sales team to complement the company’s own distribution network of approximately 500 active sales partners.”

Fusion did not immediately respond to an inquiry about its rules of engagement as a result of the new direct sales force.

Fusion, a publicly traded provider of cloud communications, connectivity and computing services, said it bought privately held PingTone, which offers integrated cloud communications services, for its customer base and the growth opportunities that come from combining the two firms.

For example, Fusion now gets access to PingTone’s 250 business customers concentrated in the energy, healthcare, finance, emergency response and national defense sectors. Those buyers feature ARPU of more than $2,900 – higher than the industry standard – and churn of .5 percent, lower than the industry standard, according to Fusion.

Plus, PingTone employs managers and staff who will help Fusion grow through cross-selling and up-selling, Fusion said. Fusion further plans to use PingTone’s reach to help it expand into the government sector and Washington, D.C., area.

Fusion paid $10 million for its new subsidiary; $7.5 million of that was cash and $2.5 million was Fusion common stock, with $5 million of the overall price funded by Fusion’s lenders. Investment bank Q Advisors LLC served as PingTon’s financial adviser. PingTone marks Fusion’s third purchase in the past two years. Earlier this year, Fusion closed on the acquisition of Broadvox’s cloud assets and, in late 2012, snapped up Network Billing Systems.

Fusion expects this latest deal to create $950,000 of annual cost synergies, and said extra revenue will come from up- and cross-sales of the companies’ combined products and services.

“Both companies are excited about the value we can create as we come together through this acquisition,” said Matthew Rosen, CEO of Fusion.

Shares of Fusion were trading 7.84 percent higher just a few minutes shy of noon Eastern on Monday.


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