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

Verint Systems Inc. announced its acquisition by Thoma Bravo for $2 billion, offering shareholders $20.50 per share, following strong Q2 performance.

Summary

• Verint Systems Inc. has entered into a definitive agreement to be acquired by Thoma Bravo, a software investment firm, in an all-cash transaction reflecting an enterprise value of $2 billion.
• Verint common shareholders will receive $20.50 per share in cash, representing an 18% premium to the company's 10-day volume weighted average share price up to June 25, 2025.
• The acquisition is expected to close by the end of the year, within the next four months, subject to regulatory approval and shareholder vote.
• In the second quarter, Verint achieved 6.4% year-over-year growth in its Annual Recurring Revenue (ARR), exceeding guidance by $8 million.
• The AI portion of ARR grew more than 20% and now represents 51% of total ARR, marking an important milestone in CX automation market leadership.
• Upon closing, Verint will join forces with Thoma Bravo portfolio company Calabrio, aiming to create the industry's broadest CX platform for automating CX workflows with AI-powered solutions.

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to strong Q2 financial performance exceeding guidance, a significant acquisition at an 18% premium, and a strategic investment that promises future growth and market leadership in CX automation with AI. The management's tone is confident and forward-looking.

Positives

• Achieved strong Q2 performance with 6.4% year-over-year ARR growth, $8 million ahead of guidance.
• The AI portion of ARR grew over 20% and now constitutes 51% of total ARR, demonstrating leadership in CX automation.
• The $2 billion investment by Thoma Bravo is a significant endorsement of the CX automation strategy and provides access to capital for continued innovation and growth.
• Shareholders will receive a substantial 18% premium over the unaffected share price, with $20.50 per share in cash.
• The acquisition is expected to create the industry's broadest CX platform by combining Verint with Calabrio, enhancing market position and AI-powered solution offerings.
• Customer and partner feedback regarding the acquisition has been largely positive, indicating confidence in Verint's future direction.

Risks

• The proposed transaction may not be completed in a timely manner or at all, which could adversely affect Verint's business and stock price.
• Failure to satisfy any conditions to the consummation of the proposed transaction, including receipt of certain regulatory approvals, could prevent the deal from closing.
• Failure to obtain stockholder approval of the proposed transaction is a risk.
• The occurrence of any event that could lead to the termination of the transaction agreement, potentially requiring Verint to pay a termination fee.
• The announcement or pendency of the proposed transaction could negatively impact Verint's business relationships, operating results, and overall business.
• The proposed transaction may disrupt Verint's current plans and operations.
• Verint's ability to retain and hire key personnel and maintain relationships with key business partners and customers may be challenged during the transaction period.
• Management's attention may be diverted from ongoing business operations due to the proposed transaction.
• Unexpected costs, charges, or expenses may result from the proposed transaction.
• Calabrio's ability to obtain financing for the proposed transaction is a condition.
• Potential litigation relating to the proposed transaction could be instituted against the parties or their directors, managers, or officers.
• Continued availability of capital and financing, and rating agency actions, are factors that could impact the transaction.
• Certain restrictions during the pendency of the proposed transaction may limit Verint's ability to pursue certain business opportunities or strategic transactions.

Future Outlook

Verint intends to continue its innovation across all products and its platform, executing its strategy as a private company. The company looks forward to extending its category leadership in CX automation, particularly with AI, in partnership with Thoma Bravo and through integration with Calabrio.

Management Comments

• Dan Bodner, CEO and Chairman: "In Q2 we achieved 6.4% year-over-year growth in our ARR, $8 million ahead of our guidance, and the AI portion of ARR grew more than 20%, now representing 51% of our total ARR. This is another important milestone, great results, and endorsement to our CX automation market leadership."
• Dan Bodner, CEO and Chairman: "This two billion dollar investment is not only an endorsement of our vision and growth strategy, but also will allow Verint to have access to deep pockets and the capital we need to continue to innovate and win in this very exciting opportunity that is ahead of us."
• Dan Bodner, CEO and Chairman: "We are making good progress in delivering AI-powered solutions to an early stage CX Automation market, and we recently announced that our AI Annual Recurring Revenue (ARR) now represents 50% of our total ARR. We look forward to extending our category leadership together with Thoma Bravo."
• Mike Hoffmann, Partner at Thoma Bravo: "Verint's market leading CX Automation platform, enterprise customer base and talented employees position it well to shape the future of customer experience with AI as part of the Thoma Bravo portfolio."

Industry Context

The CX automation market is described as being in its early stages with huge potential, but also highly competitive. The focus on AI-powered solutions is critical for market leadership and driving business outcomes. The acquisition and combination with Calabrio aim to create a broader platform, suggesting a trend towards consolidation and comprehensive offerings in the customer experience technology sector.

Comparison to Industry Standards

• Verint is positioned as having a "market leading CX Automation platform" and is making "good progress in delivering AI-powered solutions" in an early-stage market.
• The combined entity with Thoma Bravo portfolio company Calabrio is expected to have the "industry's broadest CX platform," arming brands of all sizes with strong AI business outcomes. Specific comparable companies or projects with detailed results are not provided in the filing.

Corporate Governance

Legal Proceedings

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

Stakeholder Impact

• Shareholders: Will receive $20.50 per share in cash, representing an 18% premium, providing a clear exit strategy and immediate return on investment.
• Employees: Will transition to a private company under Thoma Bravo, with ongoing communications and FAQs provided to address concerns and ensure continuity.
• Customers and Partners: Have received positive feedback regarding the acquisition, with management committed to continued innovation and support across all products and the platform.
• Company: Gains access to significant capital and strategic support from Thoma Bravo, enabling continued innovation and strengthening its market leadership in CX automation.

Next Steps

• Provide a more detailed FAQ to employees early next week.
• Update analysts and media briefings, with much more planned for the upcoming Engage conference.
• Obtain regulatory approval for the acquisition deal.
• Hold a shareholder meeting for stockholders to vote on the deal.
• Close the acquisition deal, expected by the end of the year (within the next four months).
• Continue ongoing communication regarding developments between signing and closing.
• Integrate Verint with Thoma Bravo portfolio company Calabrio to form a combined CX platform.

Key Dates

Recommendation

For existing shareholders, the recommendation is 'hold' as the acquisition price of $20.50 per share represents an 18% premium, and the stock is likely to trade near this offer price until the deal closes. Selling now would realize the premium, while holding carries the minor risk of the deal not closing, but also the potential for a higher bid (though not indicated). For new investors, there is limited upside given the fixed acquisition price, making it less attractive for entry unless a higher bid is anticipated.

Keywords

Verint, Thoma Bravo, Acquisition, CX Automation, AI, Enterprise Software, Customer Experience, Annual Recurring Revenue, Merger, Proxy Statement, Calabrio