Publicly traded Blackbaud, a developer of software for marketing and fundraising efforts in not-for-profit healthcare, educational, religious and other organizations, announced its intent to acquire its publicly traded rival, Kintera, San Diego, in an all cash deal for $1.12 per share, or $46 million.
Kintera has 4,000 customers in many of the same industries as Charleston, S.C.-based Blackbaud, including healthcare organizations. Blackbaud, which claims more than 19,000 customers, provides both site-licensed and Web-based subscription software systems for a variety of not-for-profit applications. Kintera also offers a software-as-a-service platform for hosting accounting, constituent relationship management and marketing applications.
In addition to buying up a competitor, converting to a more measurable stream of income from subscription serviceswhich financial analysts preferhas been a goal for Blackbaud and the acquisition of Kintera will help move the company in that direction, according to Tim Williams, Blackbaud's senior vice president and chief financial officer.
Subscription revenue was already the fastest growing source of revenue at Blackbaud and it was expected to become larger than license revenue at some point in the second half of 2008, Williams said in a news release. With the acquisition of Kintera, this will become a certainty as we will add another significant source of subscription-based revenue from an on-demand service offering. The evolution of Blackbauds business model toward new revenue sources with ratable revenue recognition has been a significant and positive development over the past several years, and it complements the very strong cash flow profile of the company.
The Blackbaud statement said that the company plans to formally begin the tender offer process this week and it expects to close the deal around July 2.