NEW YORK (TheStreet) -- Shares of Mavenir Systems (MVNR) were gaining 14.7% to $16.71 on heavy trading volume Monday after Mitel Networks (MITL) - Get Report announced it will acquire the communication equipment company for $560 million.
Shares of Mitel were falling 11.3% to $9.04 following the announcement.
Mavenir shareholders will be offered both all-stock and all-cash options for each share of the company they own. Each option is valued at $11.08 in cash and 0.675 Mital shares, or $17.94 in cash for each Mavenir share.
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Mitel said the acquisition of Mavenir will help its expand its addressable market by about $14 billion by 2018, and will make it "well positioned to capitalize on increasing demand for 4G LTE services. The company said demand for 4G LTE services is growing at about 52% a year.
"We believe that the combined company is ideally positioned to capitalize on the trends within the communications industry today; namely, the convergence across enterprise and mobile networks to all-IP technologies, and the transition to cloud-based unified communications telephony and software-defined virtualized infrastructure," Mavenir CEO Pardeep Kohli said in a statement.
About 3.1 million shares of Mavenir were traded by 11:36 a.m., well above the average trading volume of about 141,000 a day.
TheStreet Ratings team rates MAVENIR SYSTEMS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MAVENIR SYSTEMS INC (MVNR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we find that net income has been generally deteriorating over time."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 31.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has fallen to -$0.05 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
- Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.75 is very high and demonstrates very strong liquidity.
- MAVENIR SYSTEMS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This year, the market expects an improvement in earnings ($0.28 versus -$0.32).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 28.6% when compared to the same quarter one year ago, falling from -$4.51 million to -$5.81 million.
- You can view the full analysis from the report here: MVNR Ratings Report