YipTV, a Florida-based provider of over-the-top television content, has proposed a $9.50 per share takeover offer for Israeli cloud calling company MagicJack VocalTel (Nasdaq: CALL), Axios has learned. This would represent nearly a 50% premium to where MagicJack stock opened trading this morning.
Small buying big: YipTV is a tiny company, with internal projections showing less than $10 million in expected 2017 revenue,. MagicJack, on the other hand, generated nearly $100 million in revenue last year, has over two million subscriber lines and sells product in around 25,000 retail locations. To finance the transaction, a source says that YipTV has negotiated around a $95 million credit facility from Goldman Sachs. It may also work with an equity sponsor.
Deal thesis: YipTV wants to build out a multi-line, consumer home services business, by using shared infrastructure and economies of scale. Or, put more simply: to Drive YipTV services into at least 10% of MagicJack customers. If successful, the company's internal models project a $1.5 billion exit within 24 months.
Connection: YipTV CEO Michael Tribolet once served as MagicJack's chief business officer. Tribolet declined comment on the MagicJack situation.
Background: Bank of America Merrill Lynch is running the sell-side process. MagicJack has publicly acknowledged that it is exploring strategic alternatives, and that earlier this year it rejected an $8.50 per share offer from Carnegie Technologies
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