IT Firm Keane Sold for $854 Million
POSTED February 8, 2007
BOSTON - Caritor, Inc., a California-based provider of IT services, has agreed to acquire Boston-based Keane for an all-cash purchase price of $854 million.
The resulting private company, with annual revenues over $1 billion and more than 14,000 professionals, is expected to be well positioned to deliver comprehensive IT and business process services to its clients, bringing together the strength of Keane's IT delivery and client service capabilities with the flexibility of Caritor's leading US-based global IT services business. Following completion of the transaction, it is expected that the combined company will operate under the Keane name and maintain Keane's employee base in Boston, Massachusetts. US operations for the combined company will be based in Boston. Caritor Chairman and CEO Mani Subramanian will become Chairman and CEO of the combined entity.
Under the terms of the merger agreement, holders of Keane's common stock will receive $14.30 per share in cash. The purchase price represents a 19 percent premium over Keane's closing share price on February 6, 2007.
The transaction will be financed through a combination of equity to be contributed to Caritor by Citigroup Venture Capital International and debt financing that has been committed by Citigroup Global Markets Inc., UBS Securities LLC, and Bank of America Securities LLC. There is no financing condition to the obligation of Caritor to consummate the transaction.
The Boards of Directors of both Keane and Caritor have each approved the transaction. Members of the Keane family and affiliated entities (representing approximately 20 percent of the current shares outstanding) have committed to vote their Keane shares owned by them in favor of the merger.
"Caritor was founded on the belief that there was a strong need for a properly proportioned, US-based multi-national resource to meet the ever-growing software development and business process outsourcing needs of our global clients," said Mani Subramanian, founder, chairman and CEO of Caritor. "Today, it is clear that clients require strong, locally-based consulting and client service combined with the flexibility and cost-effectiveness of a broad range of global IT services. The combination of Caritor and Keane will offer clients these comprehensive services. Both Caritor and Keane have a strong reputation for delivering value to their clients, many of whom have been clients of long-standing. I look forward to working with a combined team of professionals to build upon the tradition of integrity and client service common to both Caritor and Keane."
"After careful consideration of the full range of strategic alternatives, the Keane Board of Directors concluded that this transaction is in the best interest of Keane's shareholders. As a private company, combined with Caritor, Keane will be better positioned to continue to invest in growth, provide new employee opportunities, and service its clients, " said John Keane Sr., founder and chairman of Keane, Inc.
"This is a significant transaction for the industry and reflects our confidence in the new entity, its potential and its employees," said Dipak Rastogi, Head of Citigroup Venture Capital International (CVCI), an investor in Caritor. "The combination of Caritor and Keane will provide clients with substantially expanded services and distinct global capabilities. We are pleased to have the opportunity to help our portfolio companies realize their aspirations."
The transaction is expected to be completed in the Second Quarter of calendar year 2007, subject to receipt of Keane stockholder approval and customary regulatory approvals, as well as satisfaction of other customary closing conditions. Upon closing, the transaction is expected to be financed through a combination of equity to be contributed to Caritor by an affiliate of CVCI and debt financing provided by Citigroup, UBS and Bank of America.
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