CNET news - Lucent to buy Kenan Systems
By Sandeep Junnarkar
Staff Writer, CNET NEWS.COM
January 11, 1999, 8:30 a.m. ET
Lucent Technologies, the largest U.S. maker of phone equipment,
today announced it will acquire privately held Kenan Systems in a
stock deal worth about $1.48 billion.
Lucent hopes the acquisition will help it leapfrog its competitors as it enters the billing
and customer care market, considered an integral part of selling integrated solutions
in a communications software market.
Kenan specializes in highly flexible billing, order processing, and customer analysis
software that supports virtually any combination of services, vendor equipment, and
networks. This enables service providers to use one software program to produce a
single customer bill for any combination of wireless, wireline, voice, data, Internet,
and broadband cable services.
"We weren't a player in this space, so we decided to jump to the head of the pack
by acquiring the hottest player in the business," said Lucent executive vice-president
and chief operating officer Dan Stanzione in a statement. "Now we'll be providing
industry-leading products in a global third-party billing and customer care market
segment that's growing even faster than the overall communications software
market."
Lucent expects the communications software market to grow 25 percent annually to
$26 billion by the year 2000.
Stanzione added he expects the acquisition to contribute
to Lucent's growth outside the United States.
"Kenan Systems has deep relationships with incumbent
and second carriers around the world," he said. "Its
global reputation and sales channels will give Lucent
access to new customers in important world markets."
Kenan customers outside the United States generate about 40 percent of the
company's revenues, and include clients like British Telecom, MCI WorldCom in
Britain, and France Telecom, according to Lucent.
Kenan will receive about 12.88 million shares of Lucent common stock priced at
Friday's closing share price of $115.25. Lucent expects the transaction to be
completed in the quarter ending March 31, 1999.
The acquisition, which will be accounted for as a pooling of interests, is expected to
be accretive to earnings beginning in fiscal 1999, the first year of combined
operations.
The acquisition is expected to add to Lucent's already strong network management
expertise.
Kenan will remain headquartered in Cambridge, Massachusetts, when it becomes a
wholly owned subsidiary of Lucent, reporting to the company's Communications
Software Group.
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