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Clarify flies on Nortel purchase

Clarify shares took off Tuesday after Nortel Networks (NYSE: NT) said it will issue more than $2 billion in stock to buy the company. Clarify (Nasdaq: CLFY) was up 15 13/16 to 61 1/8, or 35 percent.

After market close Monday, the network equipment vendor announced a deal to buy Clarify, which makes front-office software, in a stock deal valued at $2.1 billion. The parties touted the move as a way to create an e-commerce powerhouse.

The acquisition calls for 1.3 shares of Nortel, which closed Monday at 52 3/8, to be exchanged for each share of Clarify. That would be a 50 percent premium for Clarify, based on the latter's Monday closing price of 45 5/16. The sale would be tax-free for Clarify's U.S. shareholders, the companies said.

Executives expect the transaction to close in the first quarter of next year. The companies expect the acquisition won't affect Nortel's earnings per share in 2000, and will add to them in 2001.

Clarify stockholders must approve the agreement. Nortel has an option to immediately purchase up to 19.9 percent of Clarify's shares outstanding.

Both sides portrayed Monday's announcement as a way to create a one-stop solution for e-commerce that combines Nortel's high-speed networking equipment with customer relationship software of Clarify.

"Nortel Networks' global reach and market leadership in the convergence of the Internet and communications, combined with Clarify's leadership in front office software, creates a first mover in this new wave of eBusiness," said Tony Zingale, Clarify's CEO and president.

Zingale would continue to run Clarify after the deal closes. The company's headquarters will remain in San Jose, Calif.

Also Monday, Clarify said it expects to report third quarter revenue of up to $63 million and beat Wall Street's consensus earnings estimates. First Call's survey of six analysts predicts a third quarter profit of 19 cents per share.>