Triangle telecom business Tekelec, which just 13 months ago was taken over by New York investors, is being flipped again. The buyer this time is technology giant Oracle.
Oracle announced Monday that it has agreed to acquire Morrisville-based Tekelec, which makes software for hundreds of wireless and Internet companies. Terms of the deal weren’t disclosed but several analysts said Oracle is almost certainly paying a premium on Tekelec’s previous selling price of $780 million, the amount Tekelec fetched last year.
California-based Oracle said it expects “to maintain some kind of local presence” in the Triangle, said Oracle spokeswoman Carol Sato, but the details have not been worked out. Tekelec has 625 employees in Morrisville and 1,100 worldwide.
The deal, which is slated to close in the first half of this year, is expected to incorporate Tekelec managers and employees into the Oracle Communications Global Business Unit.
After a quarter-century of trading on the stock market, Tekelec became private again last year when it was taken over by an investment group led by Siris Capital Group, a New York private equity firm. The group outbid five other investors in 2011 to acquire Tekelec, which was founded in 1971 in California and moved here in 2005.
At the time of the takeover Tekelec had shrinking prospects and lacked a clear sense of direction, resulting in the resignation of its CEO and repeated projections of weaker sales.
But Tekelec has quietly acquired emerging 4G network technologies that, among other things, perform a granular analysis of the way customers use their smartphones and tablets so that communications companies can target advertisements and promotions.
“They have reinvented themselves in a positive way,” said Raleigh-based analyst Deborah Kish of the research firm Gartner. “It’s the same company, only the next generation of Tekelec.”
Tekelec’s customer portfolio includes more than 300 telecommunications companies in more than 100 countries. Its intelligent technologies mesh with Oracle’s strategy of expanding into network and data management for communications providers. Two months ago Oracle announced a $2.1 billion acquisition of Acme Packet, a Massachusetts company that makes software to manage customer use of video, voice and data.
“Together with Oracle, we expect to accelerate the pace of service innovation by helping service providers transform the way they manage and monetize the explosive growth in signaling and data traffic on their networks,” Tekelec CEO Ron de Lange said in a statement.
Tekelec’s new products include Diameter, a technology that increases network capacity, and subscriber data management technology, which analyzes the way customers use their wireless devices. Tekelec has a majority market share in both of these emerging product lines, Kish said.
“These offerings help personalize communication services based upon customers profile, application, device usage and location,” Susquehanna Financial Group analysts wrote in a research note Monday.
Tekelec’s technology is designed to allow companies to expand network capacity using software instead of having to make costly equipment upgrades. The company’s customers include AT&T, Verizon, Spring, T-Mobile and Vodafone.
It was always understood that Tekelec, under the aegis of a private equity firm, was merely an investment and would be on the market again sooner or later, said Greg Collins, principal analyst with Exact Ventures near San Francisco. The Siris takeover was predicated on Tekelec emerging with a new identity and fresh products with growth potential.
At trade shows and in trade publications Tekelec now presents itself as a cutting-edge developer of “Thinking Networks,” which company officials say will imitate the way the human mind automatically responds to unforeseen situations. “Oracle wants to capitalize on this big transition to virtual networks,” Collins said. “Instead of using hardware products, it would be a software product that runs in a data center.”
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