iPass Acquires GoRemote

By Eric Griffith

December 12, 2005

The two remote access providers for big businesses will become one early in 2006.

With cash on hand, iPass of Redwood Shores, California is buying out its rival down the road, GoRemote Internet Communications of Milpitas. The two companies will be integrating all of their services, many of which overlap.

"We'll go from the largest to 'largester,'" jokes John Sidline, the director of corporate communications at iPass. His company also announced this morning that it had 35,000 unique hotspots in its virtual network, a number that will only grow when GoRemote's partner locations are added. Even though the two companies have extensive overlap (say, for example, with T-Mobile Hotspots), there are some unique customers on GoRemote's side (like The Cloud in the United Kingdom).

The impetus for the buyout was a desire by iPass to play more heavily in the world of fixed line broadband. GoRemote has been working with companies like AT&T, Covad, Verizon and others to provide circuits like DSL to home offices, branch offices and retail locations. "It might be provisioned by Verizon," says Sidline, "but GoRemote would aggregate the billing," just like it does with its worldwide virtual network of hotspots, broadband connections and dial-up service. Sidline says iPass has had this fixed line broadband as part of its vision for years, and worked with some partners on it, but with the GoRemote buyout can actually bring it into the network.

iPass differentiated itself from GoRemote in the announcement of the acquisition by saying it served "roaming mobile users," and that GoRemote was a leader in other areas, including "teleworkers and employees in home offices, branch offices and retail locations." The latter is a market IDC says will grow from $78 billion this year to $100 billion by 2009.

The overlap between the companies won't stop with virtual network locations; as the two companies integrate, there will also be layoffs due to redundant positions.

Once approved by stockholders and regulatory bodies, iPass will pay $1.71 per share in cash for common stock, and $3.37 per share for Series A Preferred Stock -- the total should be around $76.5 million.

It's unknown how this buyout may impact the various services powered by GoRemote, such as the Toshiba MyConnect service, but Sidline says without being specific that "a lot of the GoRemote arrangements will continue and will be 'powered by iPass'. We'll begin working on integration even before we complete the acquisition, just to lay out a roadmap." An integration committee has been formed in the company already, and Sidline hopes things will be moving along by the first quarter of 2006.



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