Hytera considering bid for Sepura

Land-mobile-radio (LMR) equipment provider Hytera Communications recently confirmed that it is considering a bid for Sepura, which last year purchased Teltronic—a company that does business in the United States as PowerTrunk, the leading TETRA solution provider in the U.S.

On Nov. 4, Sepura announced that the company is in “preliminary talks with Hytera Communications … regarding a possible offer for the entire issued and to be issued share of [Sepura].” The announcement also disclosed the type of deal that Hytera is contemplating.

“Hytera has confirmed to the Board of Sepura that any offer, if made, is likely to be solely in cash,” the Sepura statement reads. “There can be no certainty that any offer will be made, nor as to the terms of any such offer.”

Hytera issued a statement on Nov. 5 confirming its interest in buying Sepura, but the statement noted the “preliminary stage” of the talks and that there are “significant uncertainties as to whether the company will make a formal offer to Sepura.” If an offer is made, the deal “may require a range of regulatory approvals … which involve significant uncertainties,” according to the Hytera statement.

The Hytera statement also noted that the timing of the company’s decision whether to bid on Sepura is influenced in part by regulatory guidelines in the United Kingdom (UK).

“According to the relevant provisions of the UK City Code on Takeovers and Mergers (the “Code”), Hytera is required to either announce its firm intention to make a formal offer or to announce that it does not intend to make an offer, by 5 pm, December 2, 2016 (London Time),” according to the Hytera statement. “This deadline may be extended with the consent of the UK Panel on Takeovers and Mergers.”  

Hytera’s statement notes that Sepura was profitable in 2014 and 2015—reporting at least 13 million euros in profit each year—but Sepura lost more than 10.8 million euros during the fiscal year that ended on March 31, 2016. 

Sepura acquired Teltronic for $139.6 million in a deal completed in May 2015. During this year, the share price of Sepura’s stock dropped by more than 90% as the company has reported that multiple key contracts have been delayed by customers for budgetary reasons.

PowerTrunk has won multiple contracts to build TETRA systems in the United States and Canada. The company also was announced recently as a key partner for Potomac Spectrum Partners, which plans to deploy and operate vast TETRA systems that leverage Space Data balloons to provide expansive coverage and TASSTA’s interoperability solution to enable non-TETRA users to leverage the networks.