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Founded in 1994, Dialogue is one of the leading global mobile messaging and secure communications companies, with a particularly strong Tier 1 network in the Asia-Pacific Region. Through the acquisition, CLX will strengthen its customer base in the UK and Australia and add Tier 1 operator connections in New Zealand, Singapore, Malaysia, Bangladesh, Vietnam, Cambodia, Japan, Philippines, Indonesia, and Egypt.

The acquisition will also add Dialogue’s Sentinel Security Solution, a powerful and innovative software solution for mobile operators, to CLX’s existing product portfolio. The Sentinel product will further strengthen CLX’s position as a supplier of fraud and security solutions to mobile operators worldwide. The solution may significantly reduce industry fraud such as global title faking and help operators capture significant revenues that might otherwise be lost. Sentinel, in combination with CLX’s existing security solutions, will constitute one of the most powerful threat detection and prevention toolboxes in the industry today.
Background and rationale for the acquisition of Dialogue Group Ltd.

The market for enterprise cloud-based communications - those between a company’s business-critical applications and its customers or things - is growing rapidly, whether it be text messaging, voice- or video based solutions or the Internet of Things (IOT).

The acquisition of Dialogue will bring a number of benefits:
• Speed up CLX’s market entry into key Asia-Pacific countries such as New Zealand, Singapore, Malaysia, Bangladesh, Vietnam, Cambodia, Japan, Philippines, and Indonesia.
• Further expand CLX’s Tier One Super Network by adding a number of mobile operators in predominantly the Asia-Pacific region.
• Add innovative security products and functionality to the CLX product portfolio offered to the company’s mobile operator customer base and Tier 1 operator partners.
• Expected to yield net synergies of approximately GBP 1 million compared to Dialogue’s rolling 12-month profit.

The acquisition of Dialogue will be CLX’s fourth acquisition since the IPO in 2015. Mblox, acquired in 2016, gave CLX a strong position in the US and has yielded significant cost and revenue synergies. Sinch, also acquired in 2016, added leading-edge capabilities in voice and video communications. The acquisition of Xura Secure Communications earlier this year provides CLX with a strong position in Germany, Austria and Switzerland.

Information about Dialogue Group Ltd

Dialogue is a SMS messaging and security product provider based in Sheffield, UK. The company has a total of 49 employees based in London, Sydney and Singapore. In addition to delivering messaging solutions to Enterprises, Dialogue provides A2P SMS monetization software and services to many Mobile Network Operators primarily in the Asia-Pacific Region, but also around the world. Dialogue processes roughly 1.7 Billion messages annually across more than 10 countries.

In Dialogue’s Financial Year 2016 (ended July 30, 2016) revenues were GBP 32 million, gross profit was GBP 7.9 million and EBITDA was GBP 2.8 million, equivalent to an EBITDA margin of 8.8 percent.

In the twelve-month period ended February 2017 revenues were GBP 36.7 million, gross profit was GBP 11.5 and reported EBITDA was GBP 5.2 million, equivalent to an EBITDA margin of 14.2 percent.
Price, financing and timetable

• CLX is acquiring Dialogue Group Ltd. at a price of GBP 32 million on a cash- and debt free basis.
• The purchase price is equivalent to 6.1 x EBITDA, based on EBITDA for the twelwe month period ending February 2017. Net synergies of approximately GBP 1 million are expected for the coming 12 - 18 months.
• The purchase price is being paid in cash and CLX has secured financing through a credit facility provided by Svenska Handelsbanken and Danske Bank.
• Integration work will start immediately. It is expected to take 12 - 18 months and is targeted to be completed by fall of 2018.