UPDATE 2-CSG Systems agrees to buy rival Intec for $371 mln

Fri Sep 24, 2010 9:36am BST

Quotes

   

* Cos say deal will create global leader in business support

* Intec shareholders to receive 72 pence a share in cash

* Deal backed by directors, General Atlantic

* Intec shares up 32 pct to 74.5 pence

(Adds further details, analysts' reaction, shares)

By Paul Sandle

LONDON, Sept 24 (Reuters) - U.S. billing firm CSG Systems (CSGS.O) agreed to buy British rival Intec Telecom Systems ITL.L for 236.7 million pounds ($370.9 million) on Friday to create a global presence in business support systems.

Intec shareholders will receive 72 pence a share in cash under the terms of the deal, representing a 30 percent premium to the price on July 23, the day before it said it had received an approach.

Shares in Intec, which provides software to AT&T, Deutsche Telekom and Vodafone, soared 36 percent in early trade, and were 32 percent higher at 74.5 pence by 0809 GMT, indicating that investors hoped the offer would be trumped.

Analysts at Numis said it looked like a good deal, at least for CSG shareholders.

"While shareholders are likely to welcome an offer, the price feels very low to us," they said.

"There is only one significant irrevocable and we therefore see a reasonable chance of an industry counterbidder and a higher price." One bidder could be Oracle ORCL.O, he suggested.

Altium said the deal added up in terms of the two businesses, but with CSG only offering an enterprise value of 1.1 times forecast sales for 2011, a counter bid could not be ruled out.

"The offer makes strategic sense combining the businesses to create the second largest BSS provider," said analyst Jon Fletcher.

"CSG is focused mainly in the U.S and within the U.S. cable industry and this provides a diversification within the telecommunications industry."

Colorado-based CSG counts Comcast (CMCSA.O) and Time Warner (TWX.N) among its customers.

Intec has been hit by order delays and pricing pressure, causing its adjusted profit to halve in six months to end-March.

Its chief executive, Andrew Taylor, said accepting CSG's offer would create a group better able to compete globally.

"Given the increasingly difficult market conditions, and the importance of scale and relevancy to our customers, this combination represents a good deal for Intec and provides certainty for our shareholders," he said.

Private equity group General Atlantic, which has an almost 12 percent stake in Intec, was supporting the offer, the companies said in a joint statement.

CSG Chief Executive Peter E. Kalan said: "We believe that both Intec's broad suite of solutions aimed at fixed mobile and next generation networks and CSG's extensive customer interaction management suite will be attractive to one another's customer base as well as service providers worldwide."

RBS Hoare Govett advised Intec and Greenhill advised CSG Systems on the deal. ($1=.6381 Pound) (Editing By Kate Holton and Jon Loades-Carter)

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