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World Access on a spree
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January 2, 1998: 2:01 p.m. ET
Telecom trailblazer in 7th buyout, pays $71.8M for majority stake in NACT
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NEW YORK (CNNfn) - Upping its ante in the high-tech sweepstakes for wireless advantage, World Access Inc. announced it will buy a majority stake of NACT Telecommunications Inc. in a $71.8 million cash-stock deal that marks its seventh acquisition since 1995.
Under a deal signed Friday, the Orlando, Fla.-based provider of wireless switching services and products has agreed to purchase more than 4.1 million shares of NACT common stock from GST Telecommunications Inc. for $17.50 a share.
World Access said it plans to pay $59.6 million in cash and finance the remainder -- $12.2 million - by tendering its own common stock. World Access officials said the company expected to incur a yet-to-be determined one-time charge that could affect its short-term quarterly earnings.
Steven Odom, World Access's chief financial officer, said that NACT's digital STX switching technology and multi-tasking billing systems would together provide a "turnkey package" that will broaden World Access's services.
"The acquisition is in line with the company's strategy to broaden its offering of switching, transport and access products and fully support its customers as they build new and upgrade existing telecommunications networks," he said.
Under the terms of the buyout, NACT's president will continue to manage the company as a majority-owned subsidiary. World Access also reserves the option to purchase one million remaining NACT common shares at the same per-share price, for about $17.7 million. This would increase its total equity in NACT from 55 percent under the current deal, to 67 percent.
Mark Gergel, World Access's chief financial officer, called the acquisition "by far our most significant in terms of size and the nature of the technology."
Gergel said it represented the latest move in a campaign to extend World Access's international outreach while beefing up its service offerings.
He projected that company revenues would soar in 1998 to $200 million, up from $115 million as of September and $15 million in early 1995.
The NACT buyout, to be completed in February, comes less than two months after World Access agreed to acquire Advanced TechCom, Inc. in a $15 million deal in which it assumed $5 million of the latter company's debt.
That purchase was the sixth in a string of acquisitions that also includes Galaxy Personal Communications Services, Inc., Cellular Infrastructure Supply, Inc. and licensing rights to CDMA-based wireless technology.
Industry observers saw the latest move as part of a well-defined strategy. They also played down concerns that World Access may be going too far, too fast in its wireless buying binge.
"I am not surprised by the transaction," said Greg Mesniaeff, a telecommunication equipment analyst with Robinson-Humphrey. "NACT makes a small, programmable switch which addresses the largest network installations and that has particular applicability to cellular systems. And it's a product segment that World Access does not have. It is a strategic fit product wise."
In fiscal 1997, NACT, which is based in Provo, Utah, saw revenues jump 70 percent to $27.7 million and pre-tax income vault by 2,000 percent to $6.3 million.
World Access (WAXS) shares were up 1/16 at 23-15/16 while NACT (NACT) shares were down 1-1/4 at 16-12 in midday trading on the Nasdaq. GST (GST) was trading up 3/16 at 12-1/16 on the American Stock Exchange. 
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