Sangoma Technologies Corporation (TSXV:STC) entered into a stock purchase agreement to acquire Star2Star Communications, LLC for approximately $440 million on January 29, 2021. As per the transaction, consideration of approximately $437 million will be paid, consisting of an amount equal to $105 million in cash upon closing, subject to certain adjustments set out in the agreement. In addition, Star2Star shareholders will receive 110 million common shares of Sangoma, with 22 million shares issued at closing, and the remainder to be issued in instalments commencing on April 1, 2022 and continuing for the next 14 quarters. Based on the closing price of Sangoma's common shares on the TSX Venture Exchange as of January 28, 2021, the share consideration issuable to the shareholders of Star2Star would be valued at approximately $332 million, which on a debt-free and cash-free basis, and subject to customary net working capital adjustment. Majority of the cash consideration is to be funded with cash on hand from equity financing previously completed in 2020 and remainder is to be funded through debt of CAD 67 million ($52.4 million).

The consideration implies a revenue multiple of just over 5x. For the trailing twelve months ended September 30, 2020, Star2Star generated approximately $79.4 million, produced over $14.7 million of adjusted EBITDA and adjusted net income of $2.6 million. Star2Star also had total assets of $35.2 million and liabilities of $60.6 million. Bill Wignall will remain as President and Chief Executive Oficer of Sangoma upon closing of the acquisition. The resulting Sangoma board of directors shall consist of five directors, with Norman Worthington becoming Chairman of Sangoma and with NewSpring Capital, an institutional investor in Star2Star, entitled to appoint one member to Sangoma's Board. Star2Star President and Chief Revenue Officer Michelle Accardi will remain with the company in a leadership role as well. The completion of the acquisition will be subject to (a) the approval of a majority of the votes cast by Sangoma shareholders at the Special Meeting which is expected to be held near the end of March 2021 or early April 2021, (b) Exchange approval and (c) other customary closing conditions., with closing expected to occur shortly thereafter. A virtual special meeting of shareholders to be held on March 29, 2021. Sangoma's Board has unanimously approved the agreement and acquisition after consultation with its financial and legal advisors and unanimously recommends that its shareholders vote in favour of the acquisition and the resulting creation of a new Control Person. As of March 29, 2021, Sangoma expects the acquisition to close on March 31, 2021. The deal is accretive in nature.

INFOR Financial Inc. acted as fairness opinion provider and financial advisor to the Board of Sangoma. Eric Rauch, Amit Parekh, Becky Nelson, Danielle Mangogna, Ken Achenbach, Mike Royle, Joe Robertson, Sarah Bhagwandin, Anthony George, Charles Zielinski, Rob Endicott, Tyler Mark, Erika Labelle, Amy de La Lama, Jason Haislmaier, Megan Barnhill and Jennifer Mammen of Bryan Cave Leighton Paisner LLP along with Charlie Malone, Ragu Anantharajah and Julian Lupo of Wildeboer Dellelce LLP acted as legal advisors to Sangoma. Q Advisors LLC acted as financial advisor to Star2Star. Chris Miller, Nick Stawasz, Alex C. Nisenbaum, Angelo A. Stio III, Barbara T. Sicalides, David A. Wormser, Dawn Hall, Gregory C. Dorris, Joan C. Arnold, Julia E. Tomec, Matthew J. Swett, Michael J. Crumbock, Robert A. Friedel, Scott R. Jones and Shona Smith of Troutman Pepper Hamilton Sanders LLP along with Goodmans LLP acted as legal advisors to Star2Star. Kingsdale Advisors is information agent and Computershare Investor Services Inc. acted as a transfer agent of Sangoma.

Sangoma Technologies Corporation (TSXV:STC) completed the acquisition of Star2Star Communications, LLC on March 31, 2021. Immediately prior to closing, Holdings did not own any Sangoma shares. In connection with the completion of the acquisition, Holdings received 15,142,778 of the Sangoma shares issued as part of the share consideration at closing, representing approximately 11.4% of the Sangoma shares issued and outstanding immediately following closing. Holdings is also entitled to receive an additional 88,687,156 Sangoma Shares as part of the Share Consideration to be issued following closing in accordance with the distribution schedule described above. After giving effect to the issuance of all of the share consideration, Holdings would own approximately 46.9% of the Sangoma shares issued and outstanding immediately following closing. In connection with the Acquisition, Sangoma has also added Norman Worthington, the Chief Executive Officer and Executive Chair of Star2Star, and Marc Lederman, Co-founder and General Partner of NewSpring Capital, an institutional investor in Holdings prior to Closing, to its Board of Directors. Pursuant to a direction received by Sangoma from the sellers and an optionholder of StarBlue Inc. entitled to receive the Sangoma Shares issuable on closing, 480,000 of the Sangoma shares that were issuable to such parties on closing out of the 22,000,000 common shares in the capital of Sangoma were instead issued to Q Advisors LLC, a financial advisor engaged by StarBlue Inc. as partial consideration of the fee payable in connection with the acquisition. In addition, Sangoma issued 129,198 Sangoma Shares to INFOR Financial Inc. as partial consideration of the fee payable to INFOR Financial in respect of financial advisory services rendered in connection with the acquisition. The Sangoma Shares issued to Blue Face Holdings Limited, Q Advisors LLC and INFOR Financial on Closing are subject to resale restrictions for four months and one day, expiring August 1, 2021.  Holdings and Q Advisors LLC have each entered a 12 month lock-up for the common shares they received on closing.