Verint Agrees To Buy KANA Software For $514 Mln In Cash

(RTTNews) - Verint Systems Inc. (VRNT) Monday announced the signing of a definitive agreement to acquire KANA Software, Inc., a leader in customer service solutions delivered on-premises and in the cloud, for about $514 million in cash, subject to some closing adjustments.

The acquisition will extend Verint's Actionable Intelligence strategy. The collective solutions from Verint and KANA would enable organizations globally to implement a single-vendor suite to help transform customer engagement.

The acquisition of KANA, a portfolio company of Accel-KKR, is expected to be completed in Verint's first fiscal quarter ending April 30.

Dan Bodner, CEO, Verint, said, "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.''

Since the acquisition will not close until Verint's first fiscal quarter, it does not affect the company's outlook for the current year. Hence Verint backed its prior guidance for the year ending January 31, 2014.

For the next year, the year ending January 31, 2015, Verint is not updating its guidance prior to the closing of the deal.

However, Verint expects KANA to generate non-GAAP revenue in the range of $140 to $150 million and non-GAAP Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA in the range of $40 to $45 million in calendar year 2014.

Further, based on KANA's expected profitability and Verint's cost of financing, as well as the expected timing of the closing of the acquisition in Verint's first fiscal quarter, the acquisition is expected to be accretive to Verint's FYE 2015 non-GAAP earnings.

KANA will bring its approximately 900 global customers to Verint, which already has the benefit of more than 10,000 customers worldwide.

The acquisition is expected to be financed through a combination of cash on hand and debt, using around $100 million of Verint's cash, $300 million from incremental term loans and the balance from Verint's un-drawn revolving credit facility.

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.

VRNT closed down 0.8 percent on Friday at $42.41.