Sangoma Acquires All Key Assets of VegaStream

MARKHAM, ONTARIO–(Marketwire – Aug. 22, 2011) – Sangoma Technologies Corporation (TSX VENTURE:STC), a leading provider of hardware and software components that enable or enhance IP Communications Systems for both voice and data, announced it has acquired the key assets of the VegaStream Group of Companies, a leading UK-based developer of VOIP gateway appliances.

The business operations of VegaStream will be quickly integrated into Sangoma’s, with VegaStream staff being welcomed as part of the respective Sangoma teams, the majority being in R&D and Sales and Marketing. The VegaStream products will become part of the Sangoma portfolio with customers rapidly benefiting from Sangoma’s reputation for efficient supply chain management and quick turnaround of customer orders.

Sangoma is investing in new marketing, sales and product development initiatives, and this transaction is further evidence of such investments to drive ongoing growth. The acquisition of VegaStream helps Sangoma to achieve several of its strategic objectives: broadening its portfolio, adding to its distribution network, delivering existing channel partners a more comprehensive set of products, affording Sangoma an EU office to enable better service to this critical part of the world in local time zones, expanding its customer base and customer segments (including more network operators), and penetrating more deeply into developing regions, including significant upside in the key market of India with some excellent large clients.

“VegaStream has some truly great products, people, customers and distributors”, said Bill Wignall, President and CEO of Sangoma. Wignall continued, “As the IP Communications market evolves, Sangoma is re-inventing itself in order to become a significant player in more segments within that market. This acquisition supports one of our key corporate messages, ‘We are not just a board company anymore’. For years, Sangoma has provided the industry’s leading portfolio of TDM to IP cards for use inside servers, and we will continue to dominate that space. However, external gateways which provide much of the same functionality but reside outside the server as their own appliance, are becoming increasingly popular, and we want to offer our customers both options. External gateways expand our addressable market, can be easily integrated into Virtualized and Cloud based solutions, and so we hope to capture additional opportunities in this space as well as in our traditional segment. We decided to accelerate our entry to this market segment, using a ‘buy versus build’ decision, adding the well-respected VegaStream products to our portfolio. I expect this transaction will create value for Sangoma shareholders and customers alike.” We plan to continue our growth by both organic means and a few more strategically selected acquisitions.

Alexis Argent, Sales Manager at VoIPon in the UK stated, “As a customer/partner of both Sangoma and VegaStream, we believe that this acquisition will allow us to meet even more of our customers’ demands with a more comprehensive portfolio from a much stronger partner in Sangoma. We look forward to being able to offer enterprise customers and network operators their choice of either internal cards or external gateways for their IP networking needs.”

This is an all cash purchase and no new shares are being issued by Sangoma as part of this transaction. The company paid £0.9M (approximately $1.4M) in cash, subject to some minor closing adjustments, for all of the key assets of VegaStream which were partly purchased through an administration process in the UK. In addition to the operating assets, Sangoma purchased the VegaStream share of VSNPL, a JV in India. Sangoma expects the VegaStream assets to begin to contribute to the company’s earnings during the second half of fiscal 2012 once it has integrated these operations and ramped up production, and be accretive for fiscal 2013.

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