Q: Hi team,
What is your take on LMN’s aquisition news today from Casa systems? I see limited info from the press release and no numbers. Do you know the history of why casa went bankrupt and is it concerning for LMN at all being in the same industry? I can only assume LMN knows what they are doing in seeing value in these assets.
Thanks ,
Shane
What is your take on LMN’s aquisition news today from Casa systems? I see limited info from the press release and no numbers. Do you know the history of why casa went bankrupt and is it concerning for LMN at all being in the same industry? I can only assume LMN knows what they are doing in seeing value in these assets.
Thanks ,
Shane
5i Research Answer:
CASA had a substantial sales base but it has been declining. Estimated sales this year were $210M. Too much debt was the main issue, and earnings and cash flow were highly volatile. It has close to 500 customers and serves the telecommunications industry generally (voice, video, data). Terms were not released but we would expect them to be very favourable to LMN, considering the desperation of the seller in Chapter 11. To us it seems like a typical ideal situation for LMN: low price, lots of customers, still decent cash flow and cross sell opportunities.