August 31, 2016 / 11:21 AM / a year ago

Contact center company Genesys to buy Interactive Intelligence

(Reuters) - Privately-held contact center company Genesys agreed to buy Interactive Intelligence Group Inc ININ.O for about $1.4 billion as it looked to build scale in the face of fierce competition in the telecommunications software and equipment industry.

The call center software industry has seen a spate of deals in recent months, including the sale of smaller firm Calabrio earlier this week to KKR & CO LP (KKR.N) and Israel's NICE (NICE.TA) acquisition of inContact Inc SAAS.O in May.

The $60.50 per share offer is at a 36 percent premium to Interactive' s close on July 28, a day before Reuters reported that the company was considering strategic alternatives.

Shares of Interactive Intelligence closed 5.6 percent higher at $59.85 on Wednesday.

Interactive Intelligence provides software that helps call center operators analyze data and improve customer service calls. It counts Coca-Cola Co (KO.N), Sony Corp (6758.T) and Kohl's Corp (KSS.N) as some of its major customers.

Genesys, whose customers include online payment processor PayPal Holdings Inc (PYPL.O) and Red Hat Inc (RHT.N), intends to fund the deal through a combination of cash on hand and debt.

The Daly City, California-based company is also in talks to buy the contact center business that its peer Avaya Inc [AVXX.UL] is hoping to sell for more than $4 billion, Reuters reported earlier this month.

When asked about that potential deal, Genesys chief executive Paul Segre declined to comment on the matter but added that the company is "not looking at or contemplating big M&A" at this time.

Genesys received $900 million in investment last month from private equity firm Hellman & Friedman LLC, valuing the company at $3.8 billion. It is also owned by Permira Advisers LLC. Segre said the investment helped the company pursue the acquisition of Interactive Intelligence.

Interactive Intelligence posted operating losses in recent quarters as it shifted its business model to the cloud, and being private will help it spur along this transition, Segre said.

Bank of America Merrill Lynch, Citi, Goldman Sachs and RBC Capital Markets were financial advisers to Genesys.

Reuters reported in July that Interactive was working with boutique investment bank Union Square Advisors LLC on a sale process that had attracted other telecommunications software companies, as well as private equity firms.

Reporting by Rishika Sadam in Bengaluru; Editing by Anil D'Silva and Andrew Hay

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