Nokia Corporation (“Nokia”) announces its intention to acquire Comptel Corporation (“Comptel”) to advance its software strategy and provide service providers with a comprehensive solution to design, deliver, orchestrate and assure communications and digital services across physical, virtual and hybrid networks. Nokia and Comptel have on February 8, 2017 entered into a Transaction Agreement (the “Transaction Agreement”) under which Nokia, through its wholly owned indirect subsidiary Nokia Solutions and Networks Oy (the “Offeror”), undertakes to make a voluntary public cash tender offer to purchase all of the issued and outstanding shares and option rights in Comptel that are not owned by Comptel or any of its subsidiaries (the “Tender Offer”). The price offered for each share validly tendered in the Tender Offer will be EUR 3.04 in cash. The Tender Offer values Comptel at approximately EUR 347 million, on a fully diluted basis.
CRITICAL BUILDING BLOCK FOR STANDALONE SOFTWARE BUSINESS
The planned acquisition is part of Nokia’s strategy to build a standalone software business at scale by expanding and strengthening its software portfolio and go-to-market capabilities with additional sales capacity and a strategic partner network. Comptel would bolster Nokia’s software portfolio by adding critical solutions for catalogue-driven service orchestration and fulfillment, intelligent data processing, customer engagement, and agile service monetization.
The combination of Nokia’s Service Assurance portfolio and Comptel’s Service Orchestration portfolio would enable a dynamic closed loop between service assurance and fulfillment that simplifies management of complex heterogeneous networks. When combined with Nokia’s Cloudband(TM) and Nuage(TM) portfolios, Nokia would be able to provide customers with complete, end-to-end orchestration of complex Network Function Virtualization (NFV) and Software Defined Networking (SDN) deployments.
SUMMARY OF THE TENDER OFFER
•The offer price is EUR 3.04 in cash for each share in Comptel (the “Share Offer Price”)
•The Share Offer Price represents a premium of:
?28.8 percent compared to the closing price of the shares on Nasdaq Helsinki Ltd. (“Nasdaq Helsinki”) on February 8, 2017, the last trading day before the announcement of the Tender Offer; and
?51.2 percent compared to the volume-weighted average trading price of the Comptel shares on Nasdaq Helsinki during the 12-month period preceding the date of the announcement of the Tender Offer;
•The price offered for each option right granted under Comptel’s share option schemes 2014 and 2015 and validly tendered in the Tender Offer will be EUR 2.56 in cash for each 2014A option right, EUR 2.16 in cash for each 2014B option right, EUR 1.53 in cash for each 2014C option right, EUR 2.15 in cash for each 2015A option right and EUR 2.15 in cash for each 2015B option right;
•The Board of Directors of Comptel has unanimously decided to recommend that the shareholders and holders of option rights accept the Tender Offer;
•The following major shareholders of Comptel have irrevocably undertaken to accept the Tender Offer subject to certain customary conditions: Mandatum Life Insurance Company Limited, Elisa Corporation, Kaleva Mutual Insurance Company, Varma Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance Company as well as the members of the Comptel Board of Directors and the President and CEO of Comptel, representing jointly approximately 48.3 percent of the shares and votes in Comptel;
•The Tender Offer is subject to, among others, approvals by the relevant regulatory authorities, such as competition authorities, and the Offeror gaining control of more than 90 percent of the outstanding Comptel shares on a fully diluted basis;
•The Offeror will, on or about February 24, 2017, publish a tender offer document with detailed information about the Tender Offer;
•The offer period under the Tender Offer is expected to commence on or about February 27, 2017 and to run for approximately four (4) weeks. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer.
•Any distribution of dividend or other assets by Comptel after the date of the Transaction Agreement shall reduce the Share Offer Price by an amount equal to such dividend or distribution per share. Such distribution shall not affect the offer price for the Comptel option rights.
•In Nokia’s view, the Share Offer Price reflects an attractive premium over Comptel’s current and historical share prices. When setting the Share Offer Price Nokia has also considered the potential dividends which could have been payable by Comptel for the financial year 2016 and believes they are fairly reflected in the offered price.
“Nokia is committed to building its software business and is backing its commitment with strategic investments. The timing of the Comptel purchase is important as our customers are changing the way they build and operate their networks. They are turning to software to provide more intelligence, automate more of their operations, and realize the efficiency gains that virtualization promises. We want to help them by offering one of the industry’s broadest and most advanced portfolios. Comptel helps us do that,” says Bhaskar Gorti, president of Nokia’s Applications & Analytics business group.
“After careful examination of the Tender Offer, the Board of Directors of Comptel has unanimously decided to recommend the shareholders to accept it. For a shareholder, the tender price offers a possibility to sell the shares risk free at a price reflecting the potential future strategic value of the company. The Board of Directors of Comptel believes that Nokia’s global reach, strength of brand and cross-selling opportunities would benefit the activities of Comptel. Combining Comptel’s business with Nokia would offer the customers of both Comptel and Nokia a wider and more innovative software portfolio which would improve competitiveness of the combined business unit, especially in the eyes of larger customers,” says Pertti Ervi, Chairman of the Board at Comptel.
“Together with Nokia we would create an agile and innovative player which can challenge current market leaders head-to-head. Throughout the past five years we have been working hard to sharpen our thought leadership and competitiveness by rebuilding the brand, product portfolio and values driven culture. I am 100% confident that we are now capable, ready and passionate to take the next step in scaling and expanding our business beyond the ordinary with a new set of resources that Nokia would provide us,” says Juhani Hintikka, President and CEO of Comptel.
BACKGROUND AND REASONS FOR THE TENDER OFFER
In November 2016, Nokia announced its long-term strategy, Rebalancing for Growth. As part of the strategy, Nokia is strengthening its software capabilities in key areas: portfolio, services and go-to-market. The planned acquisition of Comptel would bolster go-to-market efforts with a software-dedicated sales force and strong partner network. It would also support Nokia’s desire to build a portfolio that allows customers to automate as much of their network and business operations as possible – including customer services, self-optimization, management and orchestration. Comptel would help with this objective by bringing catalogue-driven fulfilment and digital service lifecycle management, complex event processing, applications for customer engagement and service monetization; and emerging technologies for context-aware on-device commerce and IoT pattern detection.
When Comptel is combined with Nokia’s OSS, BSS, analytics and cloud technology, customers will be provided with end-to-end orchestration of complex NFV and SDN deployments – including the ability to close the loop between service assurance and fulfilment – and the intelligence and automation required to create and manage increasingly complex service offers. This would give customers a new level of automation and would be a massive improvement over the error-prone manual processes and inefficient systems in use today.
Comptel is a long-time Nokia partner. It is a listed Finnish company, founded in 1986, with over 800 employees in 32 countries. Comptel has completed over 1 400 customer projects in more than 90 countries. It processes 20 percent of world’s mobile usage data every day, orchestrates communications and digital services for more than two billion end-users daily and its largest customer has around 300 million subscribers. In 2015, Comptel’s revenue was EUR 98 million with an 8.7 percent operating margin. The company’s major sites are in Finland, Bulgaria, Malaysia, India, the United Kingdom and Norway.
The planned acquisition is not expected to have a material effect on the operations and business locations of, or on the number of jobs at Comptel.