The buyout would pay about $515 million in cash for the equity of TNS, which had close to $350 million in long-term debt at the close of the most recent quarter.
The price comes to about 6.2 times TNS's Ebitda for the past 12 months, and about 6.4 times a consensus of analysts' projected Ebitda for the coming year.
Terms of the deal value shares of Reston, Va.-based TNS at $21, a premium of 44% over the company's Monday close. TNS has the right to solicit competing offers from third parties during a 30-day go-shop period, with Siris granted the right to match a superior proposal.
If the deal unwinds, Reston, Va.-based TNS could have to pay an $18.7 million termination fee. The buyers, meanwhile, could be on the hook for a reverse-termination fee of about $32 million.
TNS, short for Transaction Network Services, is an international data communications company that specializes in point-of-sale transactions and exchange of other information. The company, founded in 1990 and in business in more than 60 countries, transmits credit and debit card transactions. Company officials in a statement said that the sale would provide a good return for shareholders and give TNS the capital it needs to expand the company and build its technology portfolio.
"Siris believes in the investments that we are making," TNS chief executive Henry H. Graham Jr. said in a statement. "Along with today's announcement, we will continue our product initiatives that can either help our customers cost-effectively navigate the complexities of network evolution or create new revenue opportunities, while providing the same level of exceptional customer service that we are known for."
Siris is the second go-private deal TNS has considered in recent years. The board in 2006 rejected a $527 million offer from founders, management and Parthenon Capital LLC to buy all outstanding shares.
New York-based Siris said it has secured committed financing consisting of a combination of equity and debt. The equity financing will be provided by an investor group led by Siris, while the debt financing will be arranged by SunTrust Robinson Humphrey Inc. and Macquarie Capital (USA) Inc.
Greenhill & Co. LLC and Gibson, Dunn & Crutcher LLP are advising a special committee of the TNS board.
UBS Securities LLC and Macquarie are advising Siris, which retained Simpson Thacher & Bartlett LLP as counsel.
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Andy Levine, an M&A partner at Jones Day in New York, believes that increased buying activity by Chinese companies will be a key driver of global M&A over the next decade. The Chinese have been big buyers of natural resources in Australia, Africa and South America, and Shuanghui International Holdings' purchase of Smithfield Foods last year was a sign of China's increased interest in U.S. companies. The deal stirred some protectionist rumblings in the U.S., but CFIUS approved the transaction, and Levine believes that decision is a positive sign for the future of Chinese M&A activity in the U.S. More video