Lucent Technologies Inc said Monday it will acquire privately- held billing and customer care software provider Kenan Systems Corp for about $1.48bn in stock, based on Friday’s Lucent closing price. The deal will see the telecommunications giant exchange roughly 12.88 million shares of its common stock for Kenan’s total equity. News of the purchase came as speculation mounted that Lucent is also in talks to buy Ascend Communications Inc (see related story). Kenan specializes in billing, order processing and customer analysis software that supports various combinations of services, vendor equipment and networks. Lucent says its offerings enable 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. And with the market for such integrated services expected to grow 25% annually to $26bn by 2000, Lucent reckons the right software package will be a major step towards grabbing a share of the profits. The company said that since it wasn’t a player in this space, it simply decided to jump to the head of the pack by acquiring the hottest player in the business. Now it expects to be able to provide industry-leading products in the third-party billing and customer care market which, the company says, is growing faster than the overall communications software market. Lucent also expects the acquisition to contribute to growth outside the US, as Kenan has relationships with incumbent and second carriers around the world, as well as global sales channels. Kenan – whose customers include British Telecom, MCI WorldCom, France Telecom, Cegetel, Optus, AT&T Worldnet, GTE Interworking and @Home Network Inc – currently does about 40% of its business outside the US. Lucent said it expects the transaction, which will be accounted for as a pooling of interests and is expected to be accretive to earnings beginning in fiscal 1999, to be completed sometime during the quarter ending March 31. After closing, Kenan will become a wholly-owned subsidiary of Lucent, reporting to the company’s Communications Software Group. Kenan president Kenan Sahin will continue as president of the new subsidiary and also become Lucent vice president of software technology. Kenan is set to remain headquartered in Cambridge, Massachusetts.
