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Verint (VRNT) to Acquire Comverse (CMVT) in Cash and Stock Deal

August 13, 2012 8:03 AM EDT Send to a Friend
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Verint Systems Inc. (Nasdaq: VRNT) has signed a definitive merger agreement (the “Merger Agreement”) with Comverse Technology, Inc. (Nasdaq: CMVT). Under this Agreement, following the completion of CTI’s previously announced distribution of its telecom business and substantially all of its other assets, other than its holdings in Verint, to its shareholders Verint will acquire CTI, eliminating CTI’s majority ownership in and control of Verint. CTI currently holds approximately 41.0%, of Verint’s outstanding common shares and all of Verint’s outstanding convertible preferred shares which, if converted, would result in CTI holding approximately 53.7% of Verint’s basic outstanding common shares.

Under the terms of the Merger Agreement, Verint will acquire CTI for approximately 27.5 million Verint common shares (a number of shares equal to CTI’s ownership on an as converted basis at the expected time of transaction closing) plus up to an additional $25 million in Verint common shares (with the final additional amount dependent on the timing of CTI’s distribution or other disposition of substantially all of its non-Verint assets (the “Comverse Disposition”)). The Verint convertible preferred shares held by CTI are currently entitled to accrued dividends at an annual rate of 3 7/8%, and as such, the maximum additional amount of $25 million is equivalent to approximately two years of dividends that CTI would otherwise have been entitled to receive if the convertible preferred shares had remained outstanding.

The closing of the merger is subject to certain conditions including, among other things, the completion of the Comverse Disposition, the filing by Verint and effectiveness of a Form S-4 registration statement, and receipt of the requisite approval of Verint and CTI shareholders. CTI has agreed to vote all of its Verint shares in favor of the merger at the Verint stockholder meeting to approve the merger. In addition to the stockholder approvals required by applicable law, the Merger Agreement provides that the merger must be approved by the affirmative vote of holders of a majority of Verint common shares present at the stockholder meeting that are not held by CTI or its subsidiaries. Verint currently expects to file the Form S-4 registration statement with the Securities and Exchange Commission in its third quarter or early in its fourth quarter and to close the merger in its first quarter of next year, however, there can be no assurance as to when or if the transactions contemplated by the Merger Agreement will be consummated.

Verint's board of directors, acting upon the unanimous recommendation of a special committee of the board comprised solely of independent and disinterested directors (the "Special Committee") approved the Merger Agreement and the transactions contemplated thereby and recommended that Verint's stockholders (other than CTI) vote to approve the Merger Agreement and the transactions contemplated thereby. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors, Citigroup Global Markets Inc. and Loeb & Loeb LLP. Verint received legal advice from Jones Day.

Verint’s nine person board currently includes four CTI-affiliated directors (members of the CTI’s board of directors or management). Prior to completion of the merger, it is expected that two of these CTI-affiliated directors will be replaced with independent directors pursuant to an existing agreement between CTI and Cadian Capital previously disclosed by CTI. Concurrent with the merger, the remaining CTI-affiliated directors are expected to resign from the Verint board.




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