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January 12, 2009

Aladdin in $160m takeover deal

Private equity firm snaps up security vendor

By Jason Stamper

Aladdin Knowledge Systems Ltd, the Israeli security company behind one of the most widely used USB-based authentication systems, is to be acquired by a private equity firm in a deal worth $160m (£107m).

Vector Capital has agreed to acquire the password and access management supplier at a respectable premium to recent trading.

Stockholders stand to receive $11.50 (£7.74) in cash for each share which is a near 20% premium over its Friday closing price which itself was 64% cent up on its value on 5 January, when news of the bid first broke.

It is understood that the private equity company has been preparing a take over since August 2008, when it announced that it had reached a 9% stake in the company.

Back then an original bid of $13 (£8.75) was snubbed by Aladdin as being an opportunistic offer which undervalued the company, so today’s transactions is a good reflection of current market conditions.

Aladdin eToken is a USB-based smart card device that is used for strong two-factor authentication to enterprise networks and e-commerce transaction security.

The company said in its last quarterly financial statement in October 2008 that it expected its 2008 non-GAAP revenues to be between $124m (£83m) and $134m (£90m).

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Vector Capital was founded in 1997 and is based in San Francisco. It currently manages over $2bn in equity capital, running a portfolio that includes a number of other information security suppliers, including such names as LANdesk Software, Savi Technology, Safenet and Watchguard Technologies.

The company said it expects this latest transaction to close in the next two to three months.

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