inContact to Be Acquired by Israeli Peer NICE

inContact(NASDAQ: SAAS), which describes itself as the leader of the cloud contact center software segment, revealed on Wednesday that it has reached an agreement to be acquired. The buyer is Israel-based NICE(NASDAQ: NICE), which also offers contact center products, in addition to compliance and monitoring systems, and associated solutions.

NICE will pay $14 per share for the company in an all-cash deal. That’s a 55% premium to inContact’s closing share price on Tuesday, the day before the deal was announced. The total value of the deal is estimated at $940 million, which includes the assumption of the target company’s outstanding convertible debt.

In its press release announcing the acquisition, NICE waxed enthusiastic about its synergistic potential. “Together, inContact and NICE are making history by reinventing customer service as we know it, combining our best-in-class contact center applications and analytics with cloud contact center,” said NICE CEO Barak Eilam.

NICE believes that owning inContact will be accretive to its non-GAAP earnings in 2017.

NICE is to fund the deal with cash on hand, in combination with debt financing up to $475 million. The latter will impact the company’s balance sheet, since it had no debt at all as of this past February (the end of its 2015 fiscal year).

However, it continues to be very profitable — in USD terms, net income for 2015 was nearly $260 million, on revenue of $927 million, according to preliminary results. Both line items represented year-over-year growth, the latter particularly so. Meanwhile, operating cash flow rose by 34% to the equivalent of almost $245 million.

With that in mind, and considering the compatibility of the two companies, buying inContact looks like an opportunistic and potentially beneficial move for NICE, in spite of that substantial premium.

inContact’s board of directors unanimously voted in favor of the acquisition. It is still subject to approval from that company’s shareholders, and from the relevant regulatory authorities. The deal should close in the second half of this year, both companies said.

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Eric Volkman has no position in any stocks mentioned.

inContact to Be Acquired by Israeli Peer NICE