(Adds details, background, analyst comments)
By Bijoy Anandoth Koyitty
BANGALORE Jan 12 Israel-based software
security company Aladdin Knowledge Systems Ltd
ALDN.OALDN.TA said it agreed to be acquired by an investor
group led by private equity firm Vector Capital for about $160
million, sending its shares up as much as 16 percent.
The offer price of $11.50 a share in cash represents a
premium of about 20 percent over Aladdin's closing share price
of $9.60 on Jan. 9, the companies said in a statement.
"We believe this morning's news should bring a smile to
Aladdin shareholders' faces," Daniel Ives, an analyst with
Friedman Billings Ramsey, wrote in a note to clients.
Oppenheimer & Co analyst Shaul Eyal said the $11.50 a share
offer was fair and just.
Placing Aladdin's DRM and authentication assets under
common management with the firm's portfolio company SafeNet
makes considerable strategic sense, Vector Capital partner
David Fishman said in the statement.
Vector Capital had made two failed attempts earlier in 2008
to acquire Aladdin, before cementing Monday's deal that values
the company at much less than its earlier bids.
Last October, Aladdin had received a non-binding proposal
from Jasmine Holdco LLC, an affiliate of Vector, to buy all of
Aladdin's shares for $14.50 per share.
Prior to that, Vector had made $13 a share bid through
SafeNet, a software security company, in August.
The bid, along with an alternative proposal to acquire
Aladdin's digital rights management (DRM) business for $125
million to $135 million, was rejected by the board.
"We believe Vector's ability to combine Aladdin and
SafeNet's products underone roof should result in a much more
efficient combined entity that will have a major stronghold on
its digital rights management segment," Ives said.
Aladdin's ability to boost its top line as a standalone
company has become more challenging, given the headwinds that
the company is facing in the field, Ives said.
Aladdin's DRM technology allows software publishers to
avoid software theft and piracy, while the enterprise security
solutions enable organizations to secure their assets by
managing authentication and content security.
Shares of Aladdin have surged 37 percent to $9.62 at close
on Jan. 6, following a news report that the deal was close to
As of last Friday, they had lost about 25 percent of their
value since Vector made its first bid in August. They were
trading up $1.40 at $11.00 in morning trade on Nasdaq.
(Reporting by Bijoy Koyitty in Bangalore; Editing by Anil