Providence, Warburg fund $1.35bn telco deal

The two equity houses have agreed to evenly split the equity of Telcordia Technologies in a $1.35bn leveraged buyout.

Providence Equity Partners and Warburg Pincus are ready to take ownership of Telcordia Technologies, a telecommunications software maker and service provider based in Piscataway, New Jersey.

The two houses have announced a definitive agreement to fund the purchase of the business from Science Applications International Corporation (SAIC) in a deal valuing Telcordia at $1.35 billion (€1.05 billion). If the deal goes through, Providence and Warburg will pay cash for the company and own equal shares of the equity.

Telcordia’s clients are IP, fixed-line, wireless and cable companies. In a press release, the company said its products and services were used by telephone networks handling over 80 percent of US traffic.

The completion of the sale is subject to regulatory approval. For SAIC, the deal will end a seven-year period of owning Telcordia.

The new owners will be apply relevant sector experience to the business.

With $9 billion under management, Rhode Island-based Providence is the world’s largest private equity group solely focused on investing in telecoms and media companies.

In September, the firm closed its fifth fund on $4.25 billion (€3.45 billion). Recent investments include Sony’s $3 billion buyout of Hollywood studio Metro-Goldwyn-Mayer, in which Providence took part alongside buyout shops Texas Pacific Group and DLJ Merchant banking Partners.

Warburg Pincus, which manages $13 billion, counts software and technology among its preferred industry sectors. Relevant investments include Avaya, BEA Systems, Bharti Tele-Ventures, Harbour Networks, NeuStar and VERITAS Software