Kana Communications, Inc. (Nasdaq: KANA) said Monday it will acquire Silknet Software (Nasdaq: SILK) in a stock swap valued at $4.2 billion based on Kana's closing price of 258 7/8 Friday.
The deal combines Kana's online customer support software with Silknet's e-business applications and systems. Both companies (stock chart) have been public less than a year -- Kana went public in September priced at $15 and Silknet went public at $15 in June.
Under the terms the deal, each outstanding share of Silknet common stock will be exchanged for 0.83 shares of Kana common stock. That exchange ratio values Silknet at more than 214, well above Silknet's closing price of 138 1/2. Kana said the exchange rate is a 21 percent premium over the average exchange ratio for the last 30 days.
All outstanding options and warrants to purchase Silknet common stock will be assumed by Kana, adjusted for the exchange ratio. On a fully diluted basis, Kana will issue about 16.4 million shares, or 33.7 percent of the company, to pay for the deal.
Kana said it will integrate Silknet's software to create a software platform that will allow customers, including consumers, employees or partners, to view preferences, support requests, sales questions and order status.
The combined company will have about 450 customers, including Microsoft, Williams-Sonoma, E*Trade, and eBay.
The transaction, which has been unanimously approved by both the Kana and Silknet boards, is subject to shareholder approval. The companies said the merger should close in the second quarter.