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Software maker Witness Systems to be acquired by Verint in $950 million deal
[February 14, 2007]

Software maker Witness Systems to be acquired by Verint in $950 million deal

(Atlanta Journal-Constitution, The (KRT) Via Thomson Dialog NewsEdge) Feb. 13--Shares of Witness Systems, whose software monitors customer-service phone calls, surged 20 percent Monday on news the Roswell-based company agreed to be acquired by Verint Systems in a deal valued at $950 million.

Verint Systems, based in Melville, N.Y., provides software that allows companies to analyze their performances. It will pay $27.50 per share for Witness Systems shares, which had been a 23 percent premium to the Feb. 9 closing price.

Witness Systems, with a market value of $95 million, closed Monday at $26.79, up $4.52, after trading at a 52-week high of $27.04. The Nasdaq market volume was 7.7 million shares. Verint Systems, with a market value of slightly more than $1 billion, closed at $32.28, up 22 cents, or 0.7 percent.

Verint will fund the acquisition with $650 million in debt financing by Lehman Brothers, Deutsche Bank and Credit Suisse. Comverse Technology Inc., which owns 57 percent of Verint, will make a $293 million preferred stock investment in the acquisition, and the rest will come from existing cash, the announcement explained.

Witness Systems Chief Executive Nick Discombe said in the announcement that the acquisition "makes us an attractive strategic partner" that delivers real solutions and strong investment returns in both companies' markets.

The company, with clients such as Continental Airlines and DaimlerChrysler AG, last month reported a 24 percent increase in fourth-quarter 2006 revenue, and 16 percent for the year.

Witness Systems' call-monitoring services will complement Verint's software that analyzes employee call center behavior and customer satisfaction with their call results, analysts said.

"Verint on the call-center side had a void -- they didn't have optimization software, and Witness is one of the leaders," said Friedman Billings & Ramsey analyst Daniel Ives.

Dan Bodner, president and CEO of Verint Systems, said, "This strategic move will create a platform for rapid organizational growth and provide a wealth of opportunity for our global employee population."

Witness Systems' main operations will remain in Roswell, where the company has a development center and customer support center, Ryan Hollenbeck, vice president of investor relations, said in an interview.

"We think, and they think, there will be new opportunities [from the merger]" he added.

Both Witness Systems and Verint last year disclosed Securities and Exchange Commission investigations into their executive stock-option grant policies.

As a result, David Gould resigned as chairman and chief executive of Witness Systems in early December after the internal investigation found that some stock options had been misdated. Discombe became CEO and president at that time.

The options investigation at Verint led to delays in required financial filings with the SEC, and its shares were delisted by the Nasdaq Stock Market on Feb. 1 as a result. The stock now trades in the over-the-counter, or "pink sheets," market.

Bodner said in a statement at that time that "Verint remains financially strong," and pledged to have the shares restored "in a timely fashion."

Over the weekend, another Atlanta company -- rolled aluminum maker Novelis -- announced it will be acquired by Hindalco Industries Ltd., India's biggest aluminum producer, for $3.4 billion in cash.

Novelis controls 19 percent of the world's flat-rolled aluminum products, and supplies companies including Coca-Cola, General Motors, Eastman Kodak and ThyssenKrupp AG.

Hindalco will assume $2.4 billion of Novelis' debt and will complete the deal in the second quarter, Chairman Kumar Mangalam Birla said at a Sunday news conference in Mumbai, India.

Novelis board members said they support Hindalco's offer of $44.93 a share, a 17 percent premium to the stock's Feb. 9 closing price.

Novelis, which has a market value of $2.8 billion, closed Monday at $43.67, up $5.13, or 13.3 percent, after trading at a 52-week high of $44.01. Trading volume was 25.5 million New York Stock Exchange shares.

Novelis has 12,500 employees in 11 countries. In Atlanta, the company's executive offices employ 63 people.

Charles Belbin, manager of corporate communications for Novelis, said, "We believe there will be minimal impact on employment worldwide" since the acquisition would result in essentially no overlap in company locations.

Bloomberg News contributed to this article.

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