(Reuters) - Software developer Comverse Technology Inc agreed to be bought out by Verint Systems Inc, a surveillance products maker in which Comverse holds a majority stake, in a deal valued at about $800 million.
The deal, which is expected to streamline the complex holding structure of the companies, comes nearly a year after Comverse relisted on the Nasdaq, emerging from the aftermath of a long-running options backdating scandal.
Verint will issue shares to Comverse Technology’s shareholders worth as much as 27.5 million of its common shares. This translates to $780.7 million, based on Verint’s Friday close of $28.39.
Comverse shareholders will also receive an additional $25 million in Verint shares.
“We would characterize this morning’s announcement as a clear positive for Verint and its investors, as it finally eliminates a major overhang on the name by removing Comverse’s majority ownership stake,” FBR Capital Markets analyst Daniel Ives wrote in a research note.
Comverse Technology is also the holding company for billing software maker Comverse Network Systems, which it will spin off by October. The company will also sell its stake in Starhome B.V. to Israeli private equity investment firm Fortissimo Capital.
Verint will buy back Comverse Technology’s 41 percent stake following the spin off and the sale of Starhome, eliminating the current holding company structure.
“This agreement, along with the planned spin-off of CNS, will result in a tax efficient distribution to our shareholders and direct ownership in two independent, well-capitalized publicly-traded companies,” Comverse Technology CEO Charles Burdick said.
The deal is expected to close in the first quarter ending April 30, 2013.
Goldman Sachs & Co and Rothschild Inc advised Comverse Technology on the deal.
Shares of Comverse Technology closed up 2 percent at $5.79, while those of Verint closed down about 2 percent at $27.87 on the Nasdaq.
Reporting by Sayantani Ghosh in Bangalore and Nadia Damouni in New York; Editing by Saumyadeb Chakrabarty