M&A activity was strong in 2021 as the equity markets and the economy were growing, a setting that always spurs M&A activity. While the economy and the stock market have experienced a pullback in 2022, mergers and acquisitions are still happening at a brisk pace, albeit not as fast paced as last year.
There is a different reason for brisk M&A activity in 2022 than there was last year. This year companies are being acquired because they are cheap, their share prices have dropped. There’s a lot of M&A activity in the business communications sector, and I want to highlight a recent acquisition and a company putting itself up for sale.
Last week, Rumble Inc., the video-sharing platform, and CF Acquisition Corp. VI (NASDAQ: CFVI), a special purpose acquisition company (SPAC) announced the completion of their previously announced business combination. Beginning on Monday, September 19, 2022, the company began trading as Rumble, Inc. (RUM) on the NASDAQ exchange.
Rumble will get needed cash to grow its business. The transaction provides Rumble with approximately $400 million in gross proceeds they will use to attract new content creators to the Rumble and Locals platforms, continue to build out Rumble’s independent infrastructure, expand Rumble’s teams, begin robust marketing of the platform and services, finance future acquisitions, and for other general corporate purposes.
Howard Lutnick, Chairman and CEO of Cantor Fitzgerald and CFVI, stated, “With its massive growth in users and engagement, this is an exciting time for Rumble to become public. I am excited to see ‘RUM’ shares trading in the marketplace.”
As I write this article on Tuesday, September 20, 2022, RUM has a market cap of $3.86B.
American Virtual Cloud Technologies (NASDAQ: AVCT) has announced they would like to sell the company or some part thereof. In late August, the company announced that it had retained Northland Capital Markets to advise them in connection with a comprehensive strategic review process that could lead to the sale of the company or selected assets.
At the same time, AVCT has a restructuring of top management, seemingly with the goal of maximizing value for stakeholders. As I write this article, the AVCT share price is $.23/share with a market cap of $28M. In April of 2021, the company received an unsolicited offer to buy the company at $9.00/share and that offer didn’t happen.
AVCT’s most important business unit is Kandy Solutions, acquired in December 2020. Kandy provides a cloud-based platform for Unified Communications as a Service (UCaaS), Contact Center as a Service (CCaaS), and Communications Platform as a Service (CPaaS), and Microsoft Teams Direct Routing (DRaaS). That’s a lot of alphabets, but it means the company’s cloud-based platform has attracted hundreds of customers including Microsoft, AT&T, Etisalat, Bradio, and IBM.
The total addressable market for cloud communications is on track to expand from $58 billion in 2021 to $100 billion in 2025. With revenues of $19.4M (ttm) and a current market cap of only $29M, it may not be long before a potential buyer approaches AVCT.
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