CORRECTING and REPLACING - Lantronix Announces Definitive Agreement to Acquire Electronics and Software Reportable Business Segment From Communications Systems Inc.

IRVINE, Calif., April 29, 2021 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Lantronix (NASDAQ: LTRX), please note that the timespan in the third bullet has been changed to an 18-month period. In addition, a sentence was added stating that Silicon Valley Bank and SVB Capital provided a commitment for acquisition financing. The corrected release follows: 

• Transaction brings increased scale and operating efficiencies to Lantronix; combined annual revenue expected to exceed $100 million
  
• Adds complementary switching, PoE and media conversion technologies to Lantronix IoT connectivity portfolio
• Anticipates $7 million in annualized expense synergies to be implemented over 18-month period following close of transaction
• Expects day-one accretion to earnings (excluding acquisition-related costs), with significant contribution to earnings in the first full year
• Announces conference call to discuss the acquisition
  

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.