Home Page ContentPress Releases Comverse Technology, Inc. Holding Company Agrees to be Acquired by Verint Systems Inc.; Transaction to Follow the Planned Spin-Off of Comverse, Inc.

Comverse Technology, Inc. Holding Company Agrees to be Acquired by Verint Systems Inc.; Transaction to Follow the Planned Spin-Off of Comverse, Inc.

by david.nunes

Comverse Technology, Inc. Holding Company Agrees to be Acquired by Verint Systems Inc.; Transaction to Follow the Planned Spin-Off of Comverse, Inc.

Comverse Technology Shareholders Will Receive Direct Ownership in Two Independent Public Companies, Verint & Comverse, Eliminating the Current Holding Company Structure

NEW YORK, Aug. 13, 2012 (GLOBE NEWSWIRE) — 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.


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.


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