CSG Systems International's (CSGS) agreement to be acquired by NEC "makes sense" and represents a "reasonable" valuation that complements NEC's existing operations, RBC Capital Markets said.

The brokerage said in a Wednesday note that the $2.9 billion all-cash deal, or $80.70 per share, is in line with CSG's historical valuation range and fits well with NEC's Netcracker unit, which focuses on Europe, the Middle East, and Asia-Pacific, while CSG's operations are largely centered in the US.

RBC said the combination should enhance customer, geographic, and product coverage across BSS, CX, and payment solutions, and viewed the transaction as a logical outcome following earlier reports of NEC's interest in CSG.

Given the complementary nature of the businesses and the time elapsed since initial reports, RBC said it does not anticipate another bidder emerging. The firm also said CSG is not expected to issue further earnings guidance or hold quarterly calls as the deal progresses.

The transaction, approved by both companies' boards, offers a 17% premium to CSG's Oct. 28 closing price and a 23% premium to its 30-day volume-weighted average price. It is expected to close in 2026, subject to customary approvals.

RBC lowered its rating on the stock to sector perform from outperform and raised its price target to $80.70 from $72.

Price: 78.35, Change: -0.33, Percent Change: -0.42