The telecom and internet infrastructure world has a new public company. TPx, previously known as TelePacific, has entered into a definitive agreement to acquire Pensare Acquisition Corp, which currently trades under the ticker WRLS.
Now, TPx isn't buying another telecom here. Pensare is a 'special purpose acquisition company' created and publicly listed specifically to participate in an M&A like this. When the deal is done, the combined company will trade as TPx Corp and trade under the ticker TPXC. It will be led by the current TPx management team with Pensare CEO Darrell J. Mays serving as Vice Chairman of the board of directors.
Last year TPx sold and leased back its fiber to Uniti Group, a move that can now be seen as preparation for this kind of deal. TPx has evolved smoothly from the CLEC side of the business to a specialist in UC and cloud-focused managed IT services, managing steady growth all along unlike many others who have tried.
As moves go, this one looks pretty brave. The public markets have tended not to value companies in this sector as well as private equity has, and lately the headwinds have been stronger than average. But TPx has long charted its own path, and I'm certainly not complaining because now we will have a clearer window into the company's plans.
The deal puts a valuation of about $1.1B on the combined company, trading at multiple of about 8x 2019 EBITDA. Revenues are projected to come in at $701-711M for 2019, resulting in adjusted EBITDA of $135-140M.