Israeli-American company Verint Systems Inc. (Nasdaq: VRNT) today announced that it has agreed to acquire Kana Software Inc. for approximately $514 million in cash, subject to certain closing adjustments.
The acquisition is expected to be financed through a combination of cash on hand and debt, using approximately $100 million of Verint’s cash, approximately $300 million from incremental term loans (on terms similar to Verint’s existing term loans), and the balance from Verint’s un-drawn revolving credit facility.
The deal will be closed by the end of April 2014.
Since the acquisition will not close until Verint’s first fiscal quarter, it does not affect Verint’s outlook for the current year, and Verint is re-affirming its prior guidance for the year ending January 31, 2014.
Kana Software, a developer of on-premises and cloud customer service solutions, was founded in Silicon Valley in 1996. It has 600 employees. Its solutions are based on the connection and unification of data across different channels of communications between a company or brand with its customers, including agents, the Internet, social networks, and mobile. This reduces the time in handling customers and improves customer satisfaction. The company has 900 customers and 250 government agencies worldwide, some of which are also Verint customers.
“We believe that acquiring Kana would allow Verint to offer a holistic customer engagement strategy powered by Actionable Intelligence, providing significant value for our customers and partners. Our complementary solutions represent a comprehensive offering to help optimize customer engagement, ” said Verint CEO Dan Bodner. “We have been impressed with KANA and share a common vision for our respective markets, including a firm commitment to our customers. We also believe there is a strong cultural fit between the two companies and a foundation for a successful future together, for both our current and prospective customers, as well as our employees.”
Kana owned by Silicon Valley private equity fund Accel-KKR, which manages a $2 billion portfolio of technology companies. Accel KKR acquired Kana in January 2010 for just $41 million. Following the takeover, Kana acquired several companies with synergetic operations from around the world.
At the end of Verint’s third fiscal quarter in October, it had $375 million in cash and $645 million in long-term debt. The interest rate on the debt is 4%, after the company refinanced the debt in 2013.
Jones Day served as legal advisor to Verint in connection with this transaction. Goldman, Sachs & Co. served as financial advisor and Kirkland & Ellis LLP served as legal advisor to KANA in connection with this transaction.