DEFA14A: Verint Systems to Go Private in $2B Thoma Bravo Deal

Verint Systems Inc. announced a definitive merger agreement to be acquired by Thoma Bravo for $20.50 per share, combining with Calabrio to lead CX Automation.

Summary

• Verint Systems Inc. has entered into a Merger Agreement to be acquired by Thoma Bravo for $20.50 per share.
• Thoma Bravo, a private equity firm with $184 billion in assets and over 75 portfolio companies, will invest $2 billion in the combined entity.
• Verint will become a privately held company and will be combined with Calabrio, an existing Thoma Bravo portfolio company.
• The transaction is subject to shareholder approval and various regulatory approvals, with closing expected in a few months.
• The combination aims to accelerate growth in the CX Automation market by leveraging Verint's strength with large enterprises and Calabrio's presence with mid-market customers and partners.
• Employee base compensation and annual bonus targets, along with benefits, are guaranteed at current levels until at least December 31, 2026.
• Vested equity awards will be cashed out at the deal price of $20.50 per share at closing.
• Unvested equity awards will be converted to unvested cash-settled awards, equal to the number of unvested shares multiplied by $20.50, and will continue to vest on their original schedule.

Sentiment

Score: 8

Explanation: The filing conveys a highly positive outlook regarding the acquisition, emphasizing strategic growth, financial backing, and benefits for shareholders and employees. The risks mentioned are standard for such transactions.

Positives

• Shareholders will receive $20.50 per share in cash for their outstanding common stock, representing a premium.
• The acquisition by Thoma Bravo, a prestigious software private equity firm, validates Verint's CX Automation strategy and AI leadership.
• Thoma Bravo is committing $2 billion to the growth of the CX Automation market, providing significant financial backing.
• The combination with Calabrio will create a much broader customer and partner base, accelerating growth in the early-stage CX Automation and AI adoption market.
• Verint's product roadmap and customer investments are secure, with no intention to introduce disruptive changes.
• The network of Verint partners will expand greatly, gaining access to a larger portfolio and new opportunities.
• Employee base compensation, annual bonus targets, and benefits are secured at current levels until at least December 31, 2026.
• The transaction is focused on growth, creating many new opportunities for employees going forward.

Negatives

• Verint will become a privately held company, meaning its common stock will no longer be publicly traded.
• No immediate decisions have been made regarding the organization, naming, or branding of the combined company, which may create uncertainty for employees.
• Potential for future management and organizational changes post-closing.

Risks

• The proposed transaction may not be completed in a timely manner or at all, which could adversely affect Verint's business and the price of its common stock.
• Failure to satisfy any of the conditions to the consummation of the proposed transaction, including obtaining certain regulatory approvals.
• Failure to obtain stockholder approval of the proposed transaction.
• The occurrence of any fact, event, change, development, or circumstance that could give rise to the termination of the transaction agreement, including circumstances requiring Verint to pay a termination fee.
• The effect of the announcement or pendency of the proposed transaction on Verint's business relationships, operating results, and business generally.
• Risks that the proposed transaction disrupts Verint's current plans and operations.
• Verint's ability to retain and hire key personnel and maintain relationships with key business partners and customers.
• Diversion of management's attention from Verint's ongoing business operations.
• Unexpected costs, charges, or expenses resulting from the proposed transaction.
• The ability of Calabrio to obtain financing for the proposed transaction.
• Potential litigation relating to the proposed transaction that could be instituted against the parties or their directors, managers, or officers.
• Certain restrictions during the pendency of the proposed transaction that may impact Verint's ability to pursue certain business opportunities or strategic transactions.

Future Outlook

The combined entity of Verint and Calabrio, backed by Thoma Bravo, is positioned to accelerate growth in the early-stage CX Automation market and adoption of AI. The company is committed to maintaining and investing across its entire portfolio and product roadmap, with a focus on creating new opportunities for employees.

Management Comments

• Thoma Bravo's investment represents a strong validation of our CX Automation strategy and AI leadership.
• Thoma Bravo is putting $2 billion behind our AI strategy and investing in CX Automation leadership.
• Verint, Calabrio and Thoma Bravo have a shared vision for addressing this market.
• We have no intention to change the current product roadmap or to introduce changes that would disrupt your current workflows or business.
• We will build a stronger company together with Thoma Bravo.
• Verint is a legendary brand in the CX Automation market, and Thoma Bravo values our reputation.
• This transaction is focused on growth because the CX automation market is still in its early stages with tremendous upside.

Industry Context

The CX Automation market is described as being in its early stages of growth with tremendous upside, particularly with the adoption of AI. This acquisition by a major private equity firm like Thoma Bravo, known for its software investments, signals significant confidence and investment flow into this sector. The combination of Verint's enterprise focus with Calabrio's mid-market strength aims to capture a broader share of this expanding market, aligning with a trend of consolidation and strategic investment in high-growth technology areas.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• Potential litigation relating to the proposed transaction that could be instituted against the parties to the transaction agreement or their respective directors, managers or officers.

Related Party Transactions

• NA

Stakeholder Impact

• Shareholders: Will receive $20.50 per share in cash for their outstanding common stock.
• Employees: Base compensation, annual bonus target, and benefits are secured until at least December 31, 2026. Vested equity awards will be cashed out, and unvested awards converted to cash-settled awards. New opportunities are expected due to growth focus.
• Customers: Expected to benefit from continued investment, Verint innovations, and the financial support of Thoma Bravo, with no intention to disrupt current workflows or business.
• Partners: Network will expand greatly, gaining access to a larger, broader portfolio of CX Automation capabilities and new opportunities.
• Regulatory Authorities: The transaction is subject to various regulatory approvals.

Next Steps

• Obtain shareholder approval for the proposed transaction.
• Obtain various regulatory approvals.
• Close the transaction (expected in a few months).
• Make decisions regarding the organization, naming, and branding of the combined company.
• Provide external FAQs for customers, partners, and suppliers.
• Provide a separate FAQ around compensation and benefits information for employees.

Key Dates

Recommendation

For existing shareholders, the recommendation is to sell to realize the $20.50 per share cash premium offered in the acquisition. The fixed acquisition price caps any further upside, making it prudent to exit or hold until the deal closes to receive the cash. For new investors, there is no significant investment opportunity as the price is fixed.

Keywords

Verint Systems, Thoma Bravo, Calabrio, Merger Agreement, Acquisition, CX Automation, AI, Private Equity, Software, Shareholder Approval