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Vonage buys Vocalocity for $130M in cash and stock

HOLMDEL, N.J. (AP) -- Vonage Holdings said Thursday that it reached a deal to buy fellow cloud-based communications company Vocalocity Inc. for $130 million, boosting its presence in the small- and medium-sized business market.

The deal, which has been approved by the boards of both companies, includes $105 million in cash and $25 million in Vonage stock. Vonage said it expects the acquisition to boost its adjusted earnings per share in 2015.

Holmdel, N.J.-based Vonage pointed to the privately held company's rapid growth, noting that its revenue for the first half of 2013 totaled $28 million, which was up 39 percent from the same period the year before. It ended the second quarter with 21,000 customers.

Vocalocity focuses on companies with 20 or fewer employees, which represents more than 60 percent of the small and medium business market. Vonage noted that there's significant potential for growth in that market, with 85 percent of small and medium businesses still getting their phone service through traditional carriers that charge significantly more than Vocalocity.

The deal is expected to close in the fourth quarter. When that happens, Vocalocity CEO Wain Kellum will join Vonage as president for business services.

Vonage is financing the deal with $30 million in cash and $75 million in debt. 

Shares of Vonage Holdings Corp. closed Wednesday at $3.05, up 29 percent since starting the year at $2.30.