Tag: NICE

NICE Systems double-dips on deals

Brenon Daly

Contact: Brenon Daly

Less than three months after indicating that it was looking to step back into the M&A market, NICE Systems announced two deals back-to-back. The Israeli company reached for Hexagon System Engineering on Monday, and followed that up immediately with the much more substantial purchase of Fortent. Together, the transactions run NICE’s tally of acquisitions to a baker’s dozen since 2002.

Hexagon will add location-based services technology for cell phones to NICE’s portfolio. NICE will hand over $11m in cash for Hexagon, which we estimate was generating revenue in the low single digits of millions of dollars. As an aside on this deal, we would note that it marks the first time that NICE has shopped in its home market. (Although Actimize, NICE’s largest target, was founded in Israel and still does much of its R&D there, Actimize had moved its corporate headquarters to New York City several years before NICE picked it up.) In its other acquisitions, NICE has been a bit of a globetrotter, buying companies based in Australia, the Netherlands, Germany, the UK and the US.

Meanwhile, NICE (through its Actimize subsidiary) will pay $73.5m in cash for Fortent. We estimate that Fortent was running at about $30m in revenue, with most of that coming from sales of its anti-money-laundering (AML) product. Actimize competed with Fortent in the AML market, but also offers products for fraud detection and trading compliance. Actimize, which NICE acquired in July 2007 for $280m, has now inked three deals as part of NICE. The Actimize business, combined with Fortent, is expected to top $100m in revenue next year, roughly triple where it was when NICE bought it two years ago.

What’s on NICE Systems’ shopping list?

Brenon Daly

Contact: Brenon Daly

After being out of the market for more than a year, NICE Systems is looking to do deals again. The Israeli company inked a pair of asset purchases in 2008, with a total bill just shy of $20m. Those pickups came after NICE made its largest acquisition to date, the $280m cash-and-stock purchase of Actimize. With no debt and some $530m in cash and equivalents, NICE certainly has the means to do deals. The firm didn’t offer a peak at its shopping list, but said Tuesday at the RBC Technology, Media and Communications Conference that it will be active.

As its most-significant acquisition, the addition of Actimize bolstered NICE’s analytics offering, helping to expand the number of applications the company sells. (Actimize has also thrived under NICE. We understand that the startup has doubled its revenue to $60m in the two years since NICE acquired it.) Founded in 1986, NICE sold recording technology for call centers for much of its corporate life. In the past year or so, it has expanded into additional applications, such as workforce management, customer feedback and governance, risk and compliance. Roughly three-quarters of NICE’s revenue comes from its enterprise business, with the rest coming from its security unit.

Of course, the market has been speculating on and off for many years about a large deal by NICE involving a combination with archrival Verint Systems. However, valuing any potential transaction remains a challenge because of Verint’s majority owner, Comverse Technology. (Yes, that’s the company that has been wracked by allegations of fraud and options backdating scandals, with its founder and former CEO living on the lam in Africa. The company’s financial statements are also woefully out of date.) We understand that Comverse retained a banker some time ago to help sell off some assets. If Comverse wanted to reheat that effort and shed Verint, we’re pretty sure that NICE would put aside historical rivalries and consider that consolidation play.