RIL to acquire telecom solutions firm Radisys

Reliance Industries has signed an agreement to acquire US-based open telecom solutions provider Radisys in an all cash deal.

In a statement issued on Saturday, the company said it will acquire Hillsboro (state of Oregon) headquartered company for $1.72 per share.

Nasdaq-listed Radisys has an engineering team based out of Bengaluru with nearly 600 employees. The whole team and its sales and support offices globally will be part of Reliance Industries post-acquisition.

The deal involves a valuation of roughly $74 million, and Radisys will be delisted post the acquisition. It will be subjected to statutory and regulatory approvals and will be closed in the fourth quarter of 2018.

Commenting on the development, Reliance Jio Director Akash Ambani said the acquisition will help Radisys’ top-class management and engineering team offer the company's rapid innovation and solution development expertise globally.

"It complements our work towards software-centric disaggregated networks and platforms, enhancing the value to customers across consumer and enterprise segments," he said.

Radisys delivers value to service providers and telecom equipment vendors by providing disruptive open-centric software, hardware and service capabilities that enable the migration to next-generation network topologies.

The company has a total market capitalisation of about $27.6 million. For the quarter ended March 2018, Radisys reported a net loss of $6.4 million, on a GAAP basis, on revenue of $26.2 million.

Radisys CEO Brian Bronson said the backing of India-based global conglomerate Reliance will accelerate their strategy. "The Radisys team will continue to work independently on driving its future growth, innovation and expansion. The addition of Reliance’s visionary leadership and strong market position will enhance Radisys’ ability to develop and integrate large-scale, disruptive, open-centric end-to-end solutions," he said.

RIL plans to fund the transaction through its internal accruals, the statement added. Covington & Burling LLP is acting as legal advisor and Ernst & Young provided diligence and tax advisory services to RIL.

The Mukesh Ambani-owned Jio, part of Reliance Industries, is engaged in a better fight with other competitors in Indian market. The company has invested around Rs 2,50,000 crore in its business so far to further strengthen its telecom network, technology and content segments.

The company also raised about Rs 2,500 crore by selling domestic corporate bonds. Recently, it also tapped the Korean credit market to raise $1 billion (Rs 6,800 crore), a move that will help it diversify its borrowing sources.

About two months ago, RIL also signed a pact to merge a music app with its own digital music service JioMusic in a cash-and-stock deal to create a $1 billion entity in which the Mukesh Ambani-owned company will have a stake of more than 75%.