Syniverse Snaps Up VeriSign's Messaging

Syniverse Technologies Inc. (NYSE: SVR) will splash out $175 million in cash to buy VeriSign Inc. (Nasdaq: VRSN)'s messaging business, the companies announced today. (See VeriSign Sells Messaging Biz.)

The acquisition will build on Syniverse's current messaging capabilities while also bringing new services into the company. For VeriSign, the move is part of an on-going program to off-load non-essential assets.

The deal looks good for Syniverse both strategically and financially. The company notes that the annual revenue of VeriSign's messaging business was about $140 million over the last 12-month period and that the transaction is expected to be immediately accretive to cash net income.

There's room to grow as well. Syniverse said it expects the companies' combined messaging business to grow at a rate of around 10 percent per year.

So, what does Syniverse get?

One thing is an inter-carrier gateway that delivers SMS and MMS messages across geographies and technologies, which represents about two-thirds of VeriSign's messaging business. This platform is similar to the one Syniverse already offers, according to the company's president and CEO, Tony Holcombe, who explains that "how we bring that together will be our focus in terms of looking at cost synergies."

In addition, Syniverse will acquire the following new capabilities: PictureMail, which includes a hosted MMS service center; the Premium Messaging Gateway, which manages third-party content delivery to subscribers; and Mobile Enterprise Solutions, which brings messaging services to business customers and allows operators to target enterprises with messaging services.

Those VeriSign assets will be combined with Syniverse's NEXT messaging hub.

Syniverse will also gain 300 employees from VeriSign, most of whom are located in the U.S. and the Asia/Pacific region. About 100 employees are located in India, which Holcombe says will support some specific growth plans for that market.

With the acquisition, Holcombe says, Syniverse will gain scale, global reach, and new capabilities. He also observes that, while Syniverse and VeriSign have many customers in common, those customers buy different services from the companies. "We have a lot of the same customers, but virtually none are buying the same services from us," he notes. "There is very little overlap in the services I'm selling and what VeriSign is selling."

— Michelle Donegan, European Editor, Unstrung