BOSTON -- Keane, Inc. today announced that it has signed a definitive merger agreement to acquire SignalTree Solutions Holding, Inc., a privately-held, U.S.-based corporation with two software development facilities in India and additional operations in the United States. Approximately 400 of SignalTree's 750 employees are located in India. Under the terms of the merger agreement, Keane will pay cash for all of SignalTree's outstanding stock. The enterprise value of the transaction is approximately $62 million, or 1.2 times SignalTree's 2001 revenues, which were approximately $50 million. The acquisition is subject to customary closing conditions, including regulatory approvals, and is anticipated to close during the First Quarter of 2002. The transaction is expected to be neutral to Keane's 2002 earnings and accretive in 2003.
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"Many of our customers have expressed a desire to capitalize on the economic and quality advantages of offshore delivery in their applications portfolio strategies," explained Brian Keane, president and CEO of Keane. "At the same time, however, they are indicating a strong preference to gain access to offshore capabilities through a local IT partner to lower risk and maximize flexibility. With the addition of SignalTree, Keane's customers can now move work offshore at their own pace, while maintaining the option to transfer work back to a local delivery solution."
"The addition of SignalTree's proven offshore capabilities and world-class processes will greatly enhance Keane's value proposition and the leadership position of our application outsourcing solution," Brian Keane went on to explain. "We can now offer customers the flexibility and economic advantage of a seamless client service model, which includes on-site, off-site, near-shore, and offshore delivery, with consistent processes, management disciplines and metrics."
"SignalTree is an established firm with world-class quality processes and a strong track record of servicing U.S. customers," stated Russ Cappellino, SignalTree's chairman and CEO. "We are excited about the prospect of combining our capabilities and offshore facilities with Keane's customer base, strong network of branch offices and industry-leading ADM Outsourcing solution."
Headquartered in Irvine, California, SignalTree has been providing application development and management services to U.S. and European customers since 1982, servicing clients from two large technology centers in Delhi and Hyderabad, as well as operations in the United States. SignalTree is noted for its world-class processes and metrics. Both facilities in India are independently evaluated at Level 5 on the Software Engineering Institute's (SEI) Capability Maturity Model (CMM). In addition, the facilities are certified as meeting ISO 9001 standards. Richard Knudson, president of Global Systems Technology, Inc., the agency that conducted SignalTree's SEI assessment, recently noted in InfoTech Trends that, "SignalTree has implemented one of the most comprehensive statistical process management methodologies that I have seen during my assessment of over 20 organizations in four years."
"Keane has already built a seamless client servicing model, which includes delivery from our successful near-shore facility in Halifax, Nova Scotia," said John Leahy, Keane's senior vice president of finance and CFO. "SignalTree is simply an extension of our existing model to include an offshore component. We believe that offering clients a broader range of delivery options will, over time, result in enhanced market share and improved operating margins."
Keane will host a conference call on Wednesday, February 13, 2002 at 8:30 a.m. (EST) to discuss the Company's Fourth Quarter earnings results and details related to this acquisition. Interested parties may access the call via the Internet at http://www.keane.com/ or may dial 212-676-5262 and ask for the Keane call. No advanced registration is required to participate. A replay of the call will be available beginning at approximately 10:30 a.m. on Wednesday, February 13, 2002 through 5:00 p.m. (EST) on February 22, 2002. The replay may be accessed via the Internet at http://www.keane.com/ or by calling 1-800-633-8284 (858-812-6440 from outside North America) and entering the reservation number 20242571#.
About Keane:
Founded in 1965, Keane, Inc. helps Global 2000 companies and government agencies plan, build, and manage application software to optimize business performance. The Company's services include Business Consulting, Application Development and Integration, and Application Development and Management (ADM) Outsourcing. Keane develops long-term relationships and recurring revenues with its customers based on multi-year outsourcing contracts and the consistent delivery of high quality, cost-effective, and responsive services. Keane markets its services through a network of branch offices in North America and the United Kingdom, which work in conjunction with Keane Consulting Group, a centralized Strategic Practices Group, and Advanced Development Centers.
Keane's flagship solution is its Application Development and Management (ADM) Outsourcing service, which contributed 51% of the company's total revenue in 2001. As part of this service, Keane manages and enhances a client's software portfolio under a Level of Service agreement and long-term contract. Keane currently provides services to clients either on-site at the client's facility, off-site from a remote location, or near-shore from one of Keane's Advanced Development Center's (ADC) in Halifax, Nova Scotia or Rochester, MN. Keane's ADM Outsourcing service offering incorporates project management processes, performance metrics and process improvement procedures to drive productivity and efficiency improvements from the client's application software environment. The company measures its performance by having its major outsourcing engagements independently evaluated on the SEI CMM. Keane currently has 37 client engagements evaluated at SEI CMM Level 3 or higher. Information on Keane is available in the web at http://www.keane.com/.
About SignalTree Solutions:
SignalTree Solutions is a leading provider of global sourcing IT solutions, primarily to the North American and European markets. SignalTree is a portfolio company of Arlington Capital Partners (http://www.arlingtoncap.com/), a private equity firm that acquired the company in partnership with senior management in 2001.
The company has approximately 750 employees in technology centers in Hyderabad and Delhi, India as well as at multiple locations in the United States. Both offshore technology centers have attained the most prestigious level of excellence, the Software Engineering Institute's CMM Level 5. SignalTree was founded in 1982 as Business Management Data.
SignalTree's ability to build trust and demonstrate reliability has resulted in a number of significant multi-year contracts and ongoing business from existing clients. SignalTree's experience spans multiple vertical industries including financial services, transportation, healthcare, and consumer products. Representative clients include CSX, Nabisco Foods, Countrywide Home Loans, PMI Mortgage Insurance, La Quinta Inns and Renault.
Safe Harbor for Forward-Looking Statements:
Statements in this press release regarding the proposed transaction between Keane and SignalTree, including the expected timetable for completing the transaction, the expected synergies and future benefits of the transaction and the effect of the transaction on market share, gross margins and 2002 and 2003 earnings, as well as statements regarding Keane's Fourth Quarter 2001 revenues and cash EPS, the expected accounting charge relating to the Metro transaction and any other statements about Keane's future expectations, beliefs, goals, plans or prospects, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the SignalTree transaction, the receipt of regulatory approvals in connection therewith, the ability of Keane to successfully integrate SignalTree's operations and employees, the ability to realize anticipated synergies and cost savings and the other factors described in Keane's Annual Report on Form 10-K for the year ended December 31, 2000, Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 and Registration Statement on Form S-4 (File No. 333-68566), all filed with the SEC. Keane disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
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Contact: Margo Nison, Public Relations of Keane, +1-617-241-9200, ext. 1272
Website: http://www.keane.com/ http://www.arlingtoncap.com/
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