Terry Matthews.

Tech bigwig Terence Matthews is selling NewHeights Software Corp. to a Vancouver-based voice-over-Internet-protocol (VoIP) phone company and taking on the role of the merged company's chairman, in a $21.6-million US deal.

Under the terms of the agreement, B.C.'s CounterPath Solutions Inc. will buy all NewHeights shares in exchange for 40.25 million common shares of CounterPath, and Mr. Matthews will invest $5.5 million for an additional 13.75 million shares.

"NewHeights and CounterPath are both innovative and agile companies, joining forces at an opportune time as their respective markets take off and companies are making long-term product decisions," said Mr. Matthews in a statement.

Mr. Matthews's private equity firm Wesley Clover will provide the $5.5-million investment to boost CounterPath's growth.

"I believe that the potential for business growth is excellent. Wesley Clover has mentored and made significant investments in more than 50 successful technology companies and we are pleased to include CounterPath among our investments."

The acquisition merges CounterPath's softphone solutions with NewHeights's enterprise softphone and Internet protocol (IP) application server products, and rides a recent wave of similar IP company deals.

Mr. Matthews also has his fingers in the $723-million US takeover of Inter-Tel Corp. by Mitel Networks, which he owns.

Meanwhile, rival IP equipment maker Avaya Inc. agreed to be bought for $8.2 billion US by two private equity deals, quelling fears that it might merge with Nortel Networks and form a behemoth commanding 30 per cent of the market.

CounterPath's client base, which spans more than 50 countries, includes Alcatel-Lucent, AT&T, Cisco Systems and Vonage.

"This transaction allows us to advance our roadmap and bring in additional capital and a strong strategic investment partner," said CounterPath chief executive Mark Bruk, who will become a vice-chairman of the company's board. "Our focus and resolve is strengthened as we continue on our path to create the industry's leading consumer and enterprise softphone solution provider."

The combined company will have approximately 100 employees and will be headquartered in Vancouver, with a development office in Ottawa. NewHeights employed 31 local staff as of November last year.