DEFM14A: CSG Systems to be Acquired by NEC for $80.70 Cash Per Share

CSG Systems International, Inc. stockholders are invited to a special meeting on January 30, 2026, to vote on a merger agreement where NEC Corporation will acquire CSG for $80.70 per share in cash.

Summary

• CSG Systems International, Inc. (CSG) has entered into a merger agreement with NEC Corporation (Parent) and Canvas Transaction Company, Inc. (Merger Sub).
• Merger Sub will merge into CSG, with CSG surviving as a wholly-owned subsidiary of Parent.
• CSG stockholders will receive $80.70 in cash per share, without interest and subject to withholding taxes.
• This represents a premium of approximately 17.4% over CSG's closing stock price of $68.75 on October 28, 2025, the day before the merger announcement.
• It also represents a premium of approximately 23.1% over the volume-weighted average price of $65.57 for the 30-trading day period ending October 28, 2025.
• The CSG Board of Directors unanimously determined the merger agreement and transactions are advisable, fair, and in the best interests of CSG and its stockholders, recommending a 'FOR' vote.
• Stockholders will also vote on a non-binding advisory proposal regarding executive compensation related to the merger and a proposal to adjourn the special meeting if needed to solicit additional votes.
• The merger is expected to be completed by the end of 2026, subject to stockholder and regulatory approvals.
• The merger is not conditioned on any financing arrangements; Parent and Merger Sub have sufficient funds from existing cash and bank facilities.
• Regulatory approvals required include expiration or termination of HSR Act waiting periods, CFIUS clearance, and consents under antitrust and foreign investment laws in Australia, Japan, Kenya, Saudi Arabia, South Africa, and the United Kingdom.

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to the significant premium offered to shareholders, the all-cash nature of the deal providing certainty, and the unanimous board recommendation. The financial advisor's opinion also supports the fairness of the consideration. While there are inherent risks in any merger, the disclosed terms appear favorable for CSG stockholders.

Positives

• The merger consideration of $80.70 per share represents a significant premium of 17.4% over the closing stock price on October 28, 2025, and 23.1% over the 30-day volume-weighted average price.
• The all-cash consideration provides immediate and certain value to CSG stockholders, mitigating future market risks and uncertainties associated with remaining an independent public company.
• The CSG Board unanimously recommended the merger, believing it represents the highest value reasonably obtainable for CSG common stock for the foreseeable future.
• The merger is not subject to a financing condition, increasing the certainty of consummation.
• Parent has committed to using reasonable best efforts to obtain regulatory approvals, including agreeing to certain specified regulatory actions, which enhances the likelihood of closing.

Negatives

• CSG stockholders will forgo any potential future upside or increase in CSG's value as an independent public company.
• The transaction will result in CSG common stock being delisted from Nasdaq and deregistered, ending public trading and shareholder rights.
• Executive officers and directors have interests in the merger that may differ from general stockholders, including severance benefits and accelerated equity awards.
• A termination fee of $82,000,000 is payable by CSG to Parent under certain circumstances, which could deter alternative acquisition proposals.
• The exchange of CSG common stock for cash will generally be a taxable transaction for U.S. federal income tax purposes for U.S. holders.

Risks

• The ability of the parties to complete the merger on the anticipated terms and timing, or at all, is uncertain.
• Satisfaction or waiver of other conditions to the completion of the merger, including obtaining required shareholder and regulatory approvals, may not occur.
• CSG's stock price may fluctuate during the pendency of the merger and may decline if the merger is not completed.
• Potential litigation relating to the merger could be instituted against CSG or its directors, managers, or officers, leading to delays or expenses.
• Disruptions from the merger could harm CSG's business, including current plans and operations, during the pendency of the merger.
• CSG's ability to retain, motivate, and hire key personnel may be impacted.
• Managements time and attention may be diverted from ordinary course business operations to completion of the merger and integration matters.
• Potential adverse reactions or changes to business relationships with customers, suppliers, and employees could result from the announcement, pendency, or completion of the merger.
• Legislative, regulatory, and economic developments could affect the merger.
• Certain restrictions during the pendency of the merger may impact CSG's ability to pursue certain business opportunities or strategic transactions.
• Unpredictability and severity of catastrophic events, including acts of terrorism, outbreaks of war, or global pandemics, could affect the merger.
• The merger may be more expensive to complete than anticipated due to unexpected factors or events.
• Unexpected costs, liabilities, or delays associated with the transaction may arise.
• Competitors' response to the transaction could be adverse.
• The occurrence of any event, change, or other circumstance that could give rise to the termination of the merger, including in circumstances requiring CSG to pay a termination fee, is a risk.
• The possibility that competing or superior acquisition proposals for CSG will be made.
• Risks related to customer concentration, artificial intelligence, open-source software, dependence on the global communications industry, competitive dynamics, and potential security or data breaches, as detailed in CSG's public filings.

Future Outlook

The merger is expected to be completed by the end of 2026, subject to the timely satisfaction of necessary closing conditions, including stockholder and regulatory approvals. If the merger is not completed, CSG will remain an independent public company, and its stock price is likely to decline significantly. The company's management will continue to operate the business similarly to its current state, facing existing industry risks and opportunities.

Management Comments

• Brian A. Shepherd, President and Chief Executive Officer, signed the letter to stockholders cordially inviting them to the special meeting.
• The CSG Board of Directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of CSG and its stockholders, and declared it advisable, fair to and in the best interests of CSG to enter into the merger agreement with Parent and Merger Sub.
• The CSG Board unanimously recommends that stockholders vote FOR the proposal to adopt the merger agreement, FOR the advisory compensation proposal, and FOR the adjournment proposal.

Industry Context

CSG Systems International is a leader in customer engagement, revenue management, and payments solutions, serving industries like telecom, broadband cable, media, retail, healthcare, financial services, insurance, and government. The acquisition by NEC Corporation, a Japanese information technology company with a focus on AI, security, and communications technologies, suggests a strategic move by NEC to expand its offerings and market reach in these sectors. This merger could enable NEC to enhance its social value creation and promote a more sustainable world by leveraging CSG's cloud-first architecture and customer-obsessed mindset to launch new digital services and expand into new markets.

Comparison to Industry Standards

• Jefferies LLC's financial analysis included a selected public companies analysis, comparing CSG to Amdocs Limited, Hansen Technologies Limited, LM Ericsson Telephone Company, NetScout Systems, Inc., and Nokia Corporation. The analysis used EV/CY 2026E Adjusted EBITDA multiples (8.0x-9.5x), EV/CY 2026E UFCF multiples (12.0x-15.0x), and CY 2026E P/E multiples (11.0x-16.0x) to derive implied per share equity values for CSG, which ranged from $55.50 to $88.50.
• A selected transactions analysis reviewed eight historical M&A transactions in the application software industry since May 2016, including Verint Systems Inc. (acquired by Thoma Bravo), Zuora, Inc. (acquired by Silver Lake Partners), Mobileum Inc. (acquired by H.I.G. Capital), and Comptel Corporation (acquired by Nokia Corporation). This analysis applied an EV/NTM Adjusted EBITDA multiple range of 8.0x to 11.0x, indicating an implied per share equity value range of $62.00 to $90.25 for CSG.
• The discounted cash flow analysis, based on CSG's forecasted unlevered free cash flows and a perpetuity growth rate of 2.5% to 3.5%, with a discount rate of 8.5% to 9.5%, indicated an implied per share equity value range of $61.75 to $88.50.
• The merger consideration of $80.70 per share falls within the ranges indicated by Jefferies' various financial analyses, suggesting it is in line with industry valuations for comparable companies and transactions.

Management Changes

Corporate Governance

Legal Proceedings

• Potential litigation relating to the merger could be instituted against CSG or its directors, managers, or officers.
• The Company will promptly advise Parent of any Legal Proceeding commenced after the date of the agreement against CSG and/or its directors by any Company Stockholders relating to the merger or transactions.
• CSG will give Parent the opportunity to consult with the Company regarding, or participate in, the defense or settlement of any such Legal Proceeding, but not control or direct it.
• CSG may not enter into any settlement agreement for such Legal Proceedings without Parent's prior written consent (not to be unreasonably withheld, conditioned or delayed).

Related Party Transactions

• No current director, officer, or affiliate of CSG or its subsidiaries has outstanding indebtedness to CSG or its subsidiaries, or is a party to, or directly or indirectly benefits from, any contract, arrangement, or understanding with CSG or its subsidiaries (other than a Plan) of a type that would be required to be disclosed under Item 404 of Regulation S-K, except as disclosed in the Company Disclosure Letter.

Stakeholder Impact

• **Shareholders:** Will receive $80.70 cash per share, representing a significant premium, but will lose future equity participation and voting rights in CSG. Those exercising appraisal rights may receive more or less than the merger consideration.
• **Employees:** Continuing employees will receive comparable base salary, target annual cash incentive opportunity, and other employee benefits for 12 months post-merger. Unvested equity awards will be converted to cash awards, vesting on original schedules. Some employees may receive cash-based retention awards. The CSG ESPP will terminate.
• **Customers & Suppliers:** CSG will use commercially reasonable efforts to preserve existing relationships. The merger is subject to regulatory approvals to ensure fair competition, which may involve divestitures or restrictions.
• **Management & Directors:** Executive officers and directors have interests in the merger, including severance benefits, accelerated equity awards, and indemnification/insurance arrangements. The board unanimously approved the merger, considering these interests.
• **Creditors:** Obligations under the Existing Credit Agreement will be prepaid/terminated. Convertible Notes holders' rights will be addressed in accordance with the Indenture.

Next Steps

• CSG stockholders will attend a special meeting on January 30, 2026, to vote on the merger agreement, advisory compensation proposal, and adjournment proposal.
• CSG and Parent will continue to seek necessary regulatory approvals, including HSR Act expiration/termination, CFIUS clearance, and consents under antitrust and foreign investment laws in Australia, Japan, Kenya, Saudi Arabia, South Africa, and the United Kingdom.
• The merger is expected to be completed by the end of 2026.
• If the merger is completed, CSG common stock will be delisted from Nasdaq and deregistered under the Exchange Act.
• The surviving corporation will honor indemnification and insurance arrangements for CSG's directors and executive officers for six years post-merger.
• The surviving corporation will provide continuing employees with comparable base salary, target annual cash incentive opportunity, and other employee benefits for 12 months following the effective time.
• CSG may establish a cash-based retention, integration, and business continuity bonus program for employees.
• CSG may terminate the Wealth Accumulation Plan and distribute account balances to participants.
• CSG will cooperate with Parent to address the Existing Credit Agreement, Convertible Notes, and Capped Call Transactions, including delivering payoff notices and supplemental indentures.
• CSG will continue efforts to obtain money transmitter licenses in pending jurisdictions and plan alternative arrangements.

Key Dates

Recommendation

The merger offers a substantial premium of 17.4% over the last trading day's closing price and 23.1% over the 30-day volume-weighted average price, providing immediate and certain cash value to shareholders. The all-cash nature of the deal eliminates market risk for CSG shareholders post-announcement. The unanimous recommendation by the CSG Board, supported by a fairness opinion from Jefferies LLC, indicates strong internal conviction in the value offered. While regulatory approvals are pending, Parent's commitment to 'reasonable best efforts' to secure them, including potential divestitures, and the absence of a financing contingency, suggest a high likelihood of deal completion. The Parent Termination Fee also provides a downside protection for CSG in specific regulatory termination scenarios. Given the attractive premium and high certainty of closing, a 'strong buy' is warranted for investors seeking to capture the spread between the current market price and the merger consideration.

Keywords

CSG Systems International, NEC Corporation, Merger, Acquisition, Cash Offer, Stockholder Vote, SEC Filing, Proxy Statement, Financial Services, Telecom, Software, SaaS, Customer Engagement, Revenue Management, Payments Solutions