Comverse Technology, Inc. ("CTI") (Nasdaq:CMVT) today announced
that it has signed a definitive merger agreement with its
majority-owned subsidiary Verint Systems Inc. (Nasdaq:VRNT). Under
the terms of the agreement, following the completion of CTI's
previously announced distribution to its shareholders of
substantially all of its assets, including its wholly-owned
subsidiary Comverse, Inc. ("CNS"), other than its holdings in
Verint, Verint will acquire the CTI holding company, eliminating
the current holding company structure. As of August 10, 2012,
CTI currently holds approximately 41.0% of Verint's basic
outstanding common shares and 100% 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.
Charles Burdick, Chairman and Chief Executive Officer of
Comverse Technology, Inc. said, "We are delighted to reach an
agreement that is in the best interests of the shareholders of both
CTI and Verint. This agreement, along with the planned
spin-off of CNS, will result in a tax efficient distribution to our
shareholders and direct ownership in two independent,
well-capitalized publicly-traded companies. In addition to
eliminating the current inefficient holding company structure,
CTI's elimination of the Verint convertible preferred stock will
simplify Verint's capital structure and the distribution of
Verint's shares directly to CTI's shareholders will significantly
increase Verint's public float and liquidity for
investors. Our spin-off of CNS remains on track for the end of
October, and we expect the merger transaction to close in the first
fiscal quarter ending April 30, 2013."
Financial Terms
Under the terms of the agreement, a newly formed wholly-owned
subsidiary of Verint will acquire CTI, and Verint will issue to
CTI's shareholders new Verint common shares in an amount equal to
approximately 27.5 million Verint common shares (16.3 million
common shares currently held by CTI and approximately 11.2 million
common shares underlying the convertible preferred shares at the
expected time of transaction closing) plus up to an additional $25
million ("Additional Shares") in Verint common shares
(approximately 880,592 shares based on Verint's August 10, 2012
closing stock price of $28.39). The actual number of
Additional Shares that will be issued by Verint will be based on
the timing of the CNS distribution and will be calculated based on
Verint's average stock price during a measurement period ending
shortly prior to the closing of the merger. Based on Verint's
current share price and CTI's current fully-diluted shares
calculated under the treasury method, and assuming Verint's
issuance of $25 million in Additional Shares, CTI's shareholders
would receive approximately 0.13 shares of Verint common stock for
each share of CTI owned.
The terms of the merger agreement were negotiated between CTI
and a special committee of the board of directors of Verint
consisting of independent directors not affiliated with
CTI. The merger agreement was approved by the board of
directors of CTI and by the board of directors of Verint based on
the recommendation of the special committee of Verint.
Timing
The closing of the merger is dependent on a number of factors
including, among other things, the completion of the distribution
of CNS, 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
shares in favor of the merger at any annual or special shareholder
meeting called to approve the merger. In addition to the
shareholder 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 Verint's stockholder meeting other than those shares
held by CTI or its subsidiaries. Verint currently expects to
file the Form S-4 registration statement with the Securities and
Exchange Commission early in the fourth quarter of the fiscal year
ending January 31, 2013, and the merger is expected to close in the
first fiscal quarter ending April 30, 2013.
Comverse Technology, Inc. is being advised by Goldman, Sachs
& Co. and Rothschild Inc.
Spin-off of CNS
The spin-off of CNS is subject to a number of conditions,
including final approval of the transaction by CTI's Board of
Directors, filings with, and the completion of a review process by,
the Securities and Exchange Commission, the approval of CTI
shareholders and final approval of certain material agreements by
the boards of each of CTI and CNS.
Upon completion of the proposed spin-off and prior to the effect
of any transaction that would eliminate the CTI holding company
structure, current CTI shareholders would continue to hold their
equity in CTI as well as own 100% of the equity of
CNS.
About Comverse Technology, Inc.
CTI, through its wholly-owned subsidiary CNS, is the world's
leading provider of software and systems enabling converged billing
and active customer management and value-added voice, messaging and
mobile Internet services. CNS' extensive customer base spans more
than 125 countries and covers over 450 communication service
providers serving more than two billion subscribers. CTI also holds
majority ownership positions in Verint (Nasdaq:VRNT) and
privately-held Starhome.
The Comverse Technology logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=13267
Other Important Information
This press release does not constitute an offer of any
securities for sale. In connection with the merger, CTI and
Verint expect to file with the Securities and Exchange Commission a
joint proxy statement/prospectus as part of a registration
statement regarding the proposed transaction. Investors and
security holders are urged to read the joint proxy
statement/prospectus because it will contain important information
about CTI and Verint and the proposed transaction. Investors
and security holders may obtain a free copy of the definitive joint
proxy statement/prospectus and other documents when filed by CTI
and Verint with the Securities and Exchange Commission at
www.sec.gov or www.cmvt.com or www.verint.com. Investors and
security holders are urged to read the joint proxy
statement/prospectus and other relevant material when they become
available before making any voting or investment decisions
with respect to the merger.
In connection with the previously announced spin-off, a
definitive proxy statement for CTI's shareholders would need to be
filed with the SEC and CTI would also mail a final proxy statement
to its shareholders. BEFORE MAKING ANY VOTING DECISION WITH
RESPECT TO SUCH SPIN-OFF, CTI's SHAREHOLDERS AND INVESTORS ARE
URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY, IF AND WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WOULD CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED DISTRIBUTION. Investors and security
holders can obtain, without charge, a copy of the proxy statement
relating to the proposed spin-off (if and when available), as well
as other relevant documents containing important information about
CTI, at the SEC's website (http://www.sec.gov). You may also
read and copy any reports, statements and other information filed
by CTI at the SEC public reference room at 100 F. Street, N.E.
Washington D.C 20549. Please call the SEC at 1−800−SEC−0330
for further information.
CTI and its directors, executive officers and other members of
its management and employees may be deemed to be participants in
the solicitation of proxies from its shareholders in connection
with the proposed spin-off. Information concerning the
interests of CTI's participants in the solicitation for the
proposed spin-off is set forth in CTI's Annual Reports on Form
10−K, previously filed with the SEC and would be set forth in the
definitive proxy statement relating to the spin-off if and when it
becomes available.
Forward−Looking Statements
This press release contains a number of forward-looking
statements. Words, and variations of words such as "expect",
"intend", "will", "anticipate", "believe", "propose" and similar
expressions are intended to identify forward-looking
statements. Examples of forward-looking statements include,
but are not limited to, CTI's intent to distribute CNS shares to
CTI shareholders, CTI's intent to explore the elimination of its
holding company structure, and the timing of the foregoing
actions. The forward-looking statements in this press release
are based on current expectations and assumptions that are subject
to risks and uncertainties, many of which are outside of CTI's
control, and could cause results to materially differ from
expectations. Such risks and uncertainties, include, but are
not limited to: failure to satisfy any of the conditions to
the proposed distribution, including obtaining the required
shareholder vote; adverse effects on the market price of CTI's or
Verint's common stock and on CTI's operating results because of a
failure to complete the proposed distribution; failure to realize
the expected benefits of the proposed distribution; negative
effects of announcement or consummation of the proposed
distribution or strategic alternatives on the market price of CTI's
or Verint's common stock; significant transaction costs and/or
unknown liabilities; general economic and business conditions that
affect CTI and its assets in connection with CTI's announced
intentions; unanticipated expenses such as litigation or legal
settlement expenses; tax law changes; the impact of CTI's announced
intentions on CTI's employees, customers and suppliers; future
opportunities that CTI's board may determine present greater
potential to increase shareholder value; other risks relating to
CTI's failure to cause the proposed distribution, including
Verint's resulting ability in certain circumstances to cause CTI to
cease being the majority shareholder of Verint and to limit CTI's
voting rights as a shareholder of Verint; and the ability of the
companies to operate independently following the
distribution. Actual results could differ materially. For
further information regarding risks and uncertainties associated
with CTI's businesses, please also see the risks described in the
section entitled "Forward-Looking Statements", Item 1A, "Risk
Factors" and elsewhere in CTI's Annual Report on Form 10-K for the
fiscal year ended January 31, 2012 filed with the SEC on April 2,
2012 or in subsequently filed periodic, current or other
reports. CTI undertakes no commitment to update or revise
forward-looking statements except as required by law.
CONTACT: Paul D. Baker, Comverse Technology, Inc.,
paul.baker@cmvt.com, (212) 739-1060
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