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Veramark terminates merger pact, agrees to new acquisition deal

By TROY L. SMITH
 - 6/17/2013 12:26:00 PM

Veramark Technologies Inc. has terminated its merger agreement with Varsity Acquisition LLC and All Big Ten Holdings Inc., announced in early May, in favor of a more lucrative deal with Hubspoke Holdings Inc. and TEM Holdings Inc.

The telecom expense management company made the move after a special committee of its board of directors, consisting solely of independent directors, agreed the Hubspoke deal was superior to the one with Varsity, Veramark officials said.

Under the new deal, Hubspoke and TEM have offered to purchase Veramark for $1.18 a share in cash, compared with 98 cents a share in the Varsity deal. Based on 10,791,406 shares outstanding on March 31, the Hubspoke deal would be worth roughly $12.7 million, compared to roughly $10.6 million in the deal with Varsity.

Veramark was able to obtain the deal with Hubspoke and TEM thanks to a 45-day-go-shop right that was permitted under the Varsity merger agreement. Veramark will owe Varsity a $500,000 termination fee.

The transaction between Veramark and Hubspoke is expected to close in the third quarter.

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