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iPass to buy GoRemote

Erstwhile remote-access rivals merge as telcos circle

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Enterprise-oriented remote-access connectivity provider iPass is to acquire its erstwhile arch-rival GoRemote - aka Gric - for $76.5m in cash, the pair announced last night.

If the proposed merger goes ahead, iPass will pay $1.71 for every outstanding GoRemote common share and $3.37 for its not-so-common shares. GoRemote's stock closed at $1.39 this past Friday. GoRemote's shareholders have to give the plan their thumbs-up, of course, as do US regulatory authorities. GoRemote stockholders together owning 16.7 per cent of the company have already approved the deal, iPass said.

The two firms pitched the merger as an aggregation of complementary offerings. iPass has traditionally targeted business travellers and mobile workers, initially by providing dial-up connectivity, but more recently through fixed-line broadband and wireless. GoRemote has done much the same, but according to the former rivals has had more success than iPass in recruiting companies looking to connect workers operating from remote but fixed locations. Ironically, this is also a business iPass has been pursuing, particularly with its connectivity security offerings.

Either way, the upshot is that the two will be able to merge their respective client and access-point lists, the better to provide an alternative to the connectivity packages offered by telcos and mobile carriers. As high-speed data connectivity becomes increasingly commonplace, whether through Wi-Fi hotspots, 3G cellular links or, soon, WiMax, it's going to be harder for companies like iPass and GoRemote to offer services that much larger companies don't provide too. Hence, iPass' increasing interest in security, the better to differentiate its access offer from the likes of, say, T-Mobile.

iPass and GoRemote hope that their merger will enhance the scope for such differentiation and, equally importantly, give them both the size and improved cashflow - both say the move should yield big cost-savings - to help survive the shift from mere access provision to higher-value services that are needed irrespective of the means by which the worker connects to the corporate LAN. ®

The smart choice: opportunity from uncertainty

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