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Net2Phone's ADIR VoIP Buys NetSpeak for $48 Million

One day after announcing a significant investment from data routing giant Cisco Systems, Net2Phone's ADIR VoIP Technologies said it would acquire competitor NetSpeak Corp. in a stock deal valued at $48 million.

ADIR VoIP, which was spun off from New Jersey-based Net2Phone Inc. nine months ago to sell software for telcos and Web-based voice networks, had agreed to pay between $3.00 and $3.10 for approximately 15.5 million shares of NetSpeak common stock, valuing the transaction between $46.5 and $48.2 million.

President and COO of Adir VOIP David Greenblatt will head up the combined firm which Boca Raton, FL-based NetSpeak's chief executive Mike Rich was named president and chief operating officer.

The acquisition comes just one day after ADIR VoIP announced it had secured a $25 million second round of funding from investors. The funding round, which remains open until the middle of August, saw participation from Cisco Systems, Inc. and Softbank Asian Infrastructure Fund.

Since its launch last September, ADIR has raised $48 million in capital. The company said proceeds from the new round would be used to accelerate product development and to expand sales and marketing initiatives globally into Asia Europe and Latin America.

ADIR said it is not spending any of the $25 million raised so far on the NetSpeak acquisition. An additional $21 million has been raised to finance the purchase. Money from NetSpeak's $25.6 million in cash and cash equivalents will also be used to finance the acquisition, which is expected to close in the third quarter this year.

Once the deal is closed, a spokesman for the two sides said NetSpeak's shares would be delisted from the Nasdaq exchange and folded into the privately-held ADIR.

With the purchase of NetSpeak, ADIR now grabs a huge chunk of the market for Voice-over Internet Protocol (Vo-IP) software. While ADIR's core business is the management of Web-based telephone networks, NetSpeak markets its software to telecommunication carriers looking to offer bells and whistles services.

NetSpeak's software allows carriers to market services as Internet call waiting and virtual private networks to business clients.



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