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Re:

Neutral Tandem Buys Tinet for About $95 Million

Neutral Tandem’s $95 million Tinet headline reflects the announced consideration; closing and annual-filing figures used different conversions and components.
From TheFinanceBase Team2 min to read
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Neutral Tandem announced in September 2010 that it would acquire Tinet for approximately €74.5 million, equivalent to about $94.9 million at the exchange rate it cited. The acquisition closed on October 1, 2010. Later company disclosures reported different dollar totals because they used different exchange rates and accounting components.

How much did Neutral Tandem pay for Tinet?

The headline figure of about $95 million comes from Neutral Tandem’s September 9, 2010 agreement announcement. It stated cash consideration of approximately €74.5 million, or $94.9 million using the September 8 exchange rate of €1 = $1.2733. [c001]

The agreement also described approximately €5.2 million in cash assumed and approximately €18.2 million in long-term debt to be paid off at closing. It said €5.5 million of the cash consideration would be held in escrow for two years. These were separate transaction terms, not alternative versions of the announced €74.5 million consideration. [c001]

Why later reports give different dollar amounts

Disclosure Reported amount What it represents
September 9, 2010 agreement announcement Approximately €74.5 million, or $94.9 million Announced cash consideration, converted using the September 8 exchange rate of €1 = $1.2733. [c001]
October 1, 2010 closing announcement Approximately €74.5 million, or $99.8 million Consideration stated at completion, with a different dollar conversion. [c003]
2010 Form 10-K, filed in 2011 $103.1 million total cash paid The filing itemized $77.4 million for the shares, $31.1 million of Tinet debt repaid, and $5.4 million in cash acquired. [c004]

These figures are not interchangeable: the agreement announcement, closing release, and annual filing present amounts on different dates and bases. The $95 million headline is a rounded version of the agreement announcement’s $94.9 million figure.

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Why did Neutral Tandem buy Tinet?

Tinet was an Italy-based global carrier focused on wholesale IP transit and Ethernet. Neutral Tandem said the acquisition would extend its network internationally and broaden its business beyond voice interconnection into global IP and Ethernet connectivity. [c002]

In the acquisition announcement, Neutral Tandem President and CEO Rian Wren described the strategic shift: “This acquisition redefines Neutral Tandem from a strictly voice interconnection company into a global IP-based network services company focused on delivering global connectivity for a variety of media, including voice, data and video,” [c002]

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Wren also said Tinet’s global IP backbone would help expand the companies’ Ethernet services and take Neutral Tandem’s Ethernet eXchange service global. [c002]

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When did the acquisition close, and what happened to Tinet?

Neutral Tandem completed the acquisition on October 1, 2010, and said Tinet had become its wholly owned subsidiary. [c003] In February 2012, Neutral Tandem and Tinet were rebranded as Inteliquent. [c005]

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