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In sale to Carlyle Group, Syniverse CEO sells employees on going private

Any time a huge buyer of companies like the Carlyle Group shines a light on a local corporation and picks it above all others — as Carlyle did last week, announcing plans to buy Tampa's Syniverse Technologies for $2.6 billion — there should be cause for celebration.

And there is. The only nagging question in an otherwise full-throated salute to capitalism is: What does the symbolic loss of a 23-year-old, homegrown, publicly traded, 1,400-employee (650 here) company mean for Tampa Bay?

Certainly for Syniverse, which operates off Interstate 75 in the labyrinth of small companies off Bruce B. Downs Boulevard east of Tampa, the deal appears to be a big winner. Carlyle on Thursday offered $31 a share for Syniverse, a very bullish 30 percent premium to the company's recent price and an enriching experience for Syniverse executives and shareholders once the deal goes through next year.

For Carlyle, today's cheap price of corporate debt is encouraging the firm to acquire up-and-coming companies worldwide at a prodigious pace. Syniverse also fits nicely in Carlyle's strategy to expand its portfolio of telecommunications companies. Why? Two little words: "Mobile apps." It means wireless phones and gadgets are going to be a white-hot product and service arena in the coming decades.

A company like Syniverse that can manage the increasingly complex telecom accounting behind the trillions of calls, texts, online accesses, video downloads and who-knows-what future transactions could be one heck of a prize to have in any telecom corral of corporations.

Smart move, Carlyle.

In selling to Carlyle, Syniverse — a spinoff from the old GTE (now Verizon) telecommunications business — chose to forsake its independence since 2005 as a publicly traded company with its own shareholders and its own trading symbol of SVR on the New York Stock Exchange. In exchange, Syniverse becomes a private company with fewer management headaches inside a deep-pocketed owner.

To help sell Syniverse employees on the proposed sale, CEO Tony Holcombe sent out an internal e-mail companywide pointing out the benefits in having "Carlyle Group as our single investor." Among his arguments:

• Not being public anymore means less regulation and trying to please investors with short-term performance, instead of pursuing longer-term goals.

• Carlyle would not buy the company if it did not see "great upside potential" and help the company grow. "With the backing of a global powerhouse like Carlyle, we expect to accelerate our growth trajectory" and bring products to market faster.

"I want to assure you," Holcombe wrote, "that we expect minimal effect on our day-to-day business and on our employees both now and after the transaction closes. You are all still Syniverse employees."

All true. But Syniverse's people also become employees of the Carlyle Group parent once the deal is completed.

Holcombe told my fellow St. Petersburg Times business reporter Jeff Harrington that Syniverse is a big annual contributor to the area United Way. An employee association helps decide what community causes to support, which the company then funds. Will the company and its employees under Carlyle still have that autonomy — and the resulting influence on the community?

Carlyle's story is classic. It's a private equity company started in Washington by political insiders in 1987 — the same year that Syniverse was born — in the waning years of the Reagan era.

Now Carlyle is enormous. In 2010 alone, Carlyle has spent billions buying other telecommunications businesses, a vitamin company, a European hotel chain, Brazil's largest hosiery and lingerie business, commercial properties in central London, the government consulting arm of Booz Allen Hamilton. And it has launched a new fund to invest in China, among other deals.

In Florida alone, Carlyle Group is a major investor in BankUnited. The failed South Florida bank, once the largest with headquarters in the state, was sold by federal regulators to a group backed by Carlyle and other private equity investors. BankUnited's already opening new branches, including in St. Petersburg. It's about to launch an initial public offering. And, unusual for a Florida-based bank, says it is eyeballing possible purchases of banks in New York.

So Syniverse goes from being a midsized fish in a small pond to a minnow in the rich waters of Carlyle's ocean. Although Syniverse never made the Times annual "Top 10" list of largest public companies here, it was on the cusp.

Syniverse's sale is an undeniable blow to a metropolitan region as lean in corporate headquarters as the Tampa Bay area. Metro areas with big headquarters simply have more clout.

But it's an inevitable trend of the big gobbling the small. Look at the long track record of once dominant public companies here — think Danka Business Systems, Florida Progress Corp. and Global Imaging Systems, to name a few — bought and absorbed by others.

Truth is, the presence in a metro area of big public corporations begets more big public corporations. If a large company is looking at a possible relocation, it looks for corporate peers. That's one reason last year's low-level rumor that the Texas parent company of RadioShack might fish here for a new headquarters remained just that: a low-level rumor.

We lack, and will continue to lack, headquarters density.

So, congratulations and best wishes, Syniverse. Here's hoping you don't become too invisible to this community amid the dozens of sprawling corporate portfolios and funds that is the global Carlyle Group.

Robert Trigaux can be reached at trigaux@sptimes.com.

In sale to Carlyle Group, Syniverse CEO sells employees on going private 10/30/10 [Last modified: Friday, October 29, 2010 10:37pm]
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