SILICON VALLEY----O'Melveny advised Internet of Things and Remote Environment Management solutions provider Lantronix (Nasdaq:LTRX) in a securities purchase agreement to acquire Transition Networks and Net2Edge, the electronics and software businesses of Communications Systems Inc. (Nasdaq:JCS).
Irvine, Calif.-based Lantronix facilitates development and management of innovative M2M and Out of Band Management solutions for clients across industries including manufacturing, retail, medical, security, energy, government, and more.
Communications Systems Inc., of Minnetonka, Minn., is a connectivity technology company that develops physical communications infrastructure for global broadband networks. Its business unit Transition Networks provides network integration solutions to enhance bandwidth, security, and network management. Net2Edge engineering, marketing, and business development products ensure seamless upgrades to clients switching from legacy networks to high-speed services.
The base price of $25 million to be paid by Lantronix will be augmented by up to $7 million in earnout payments.
The O'Melveny team representing Lantronix was led by Silicon Valley/San Francisco partner Noah Kornblith and included partners Warren Lazarow and Jennifer Taylor, associate Maiah Parks, and of counsel Loren Weber.
About O'Melveny
It's more than what you do: it's how you do it. Across sectors and borders, in board rooms and courtrooms, we measure our success by yours. And in our interactions, we commit to making your O'Melveny experience as satisfying as the outcomes we help you achieve. Our greatest accomplishment is ensuring that you never have to choose between premier lawyering and exceptional service. So, tell us. What do you want to achieve? Visit us at www.omm.com or learn more in our firm at-a-glance, annual report, and on LinkedIn, Twitter, Facebook, Instagram, and YouTube. Visit The Boardroom for our insights on pressing issues facing global corporations.
Contact:
Christopher Rieck
O'Melveny & Myers LLP
+1 212 326 2218
crieck@omm.com
Lantronix issued the following press release:
Lantronix (LTRX) to Acquire Electronics and Software Reportable Business Segment From Communications Systems Inc.
Lantronix Inc. ("Lantronix") (NASDAQ: LTRX), a global provider of Software as a Service (SaaS), connectivity services, engineering services, intelligent hardware and turnkey solutions for the Internet of Things (IoT) and Remote Environment Management (REM), today announced that it has entered into a definitive Securities Purchase Agreement to acquire Transition Networks and Net2Edge, which comprises the Electronics and Software reportable business segment of Communications Systems Inc. (NASDAQ: JCS) ("CSI").
Under the terms of the agreement, Lantronix will pay CSI a base price of $25.0 million, subject to customary working capital adjustments following closing, plus an earn out of up to $7.0 million, based on revenue milestones for the two 180-day periods following closing of the securities purchase agreement. The agreement is subject to customary closing conditions and CSI shareholder approval and is expected to close in June or July of 2021.
The transaction will bring immediate scale to Lantronix, with the revenues from the combined company expected to total more than $100 million on an annual basis. The acquisition will bring complementary IoT connectivity products and capabilities, including switching, Power over Ethernet (PoE) and media conversion and adapter products. Lantronix sees significant operating and product development synergies in the combined company and expects the acquisition will be immediately accretive upon closing and significantly accretive in the first full year of operations. Lantronix will have further commentary on synergies, accretion and non-GAAP EPS expectations upon closing.
"The acquisition of Transition Networks and Net2Edge demonstrates our continuing commitment to deliver incremental growth and shareholder value through acquisition," stated Paul Pickle, president and CEO of Lantronix. "In this transaction, we added significant revenue scale and operating model efficiencies while adding a highly complementary Industrial IoT connectivity product offering targeting Smart City infrastructure with significant long-term revenue synergy opportunities. We expect this acquisition will be accretive immediately upon closing, and we will drive synergies throughout our model to deliver increased cash flow for future acquisitions and for the benefit of our shareholders."
Lantronix will host an investor conference call and audio webcast at 5:00 a.m. Pacific Time (8:00 a.m. Eastern Time) on Thursday, April 29, 2021. To access the live conference call, investors should register before the call at the following link: https://attendee.gotowebinar.com/register/7605844611974218768
O'Melveny & Myers LLP served as legal advisor to Lantronix.
.
LANTRONIX, INC. 
