IT
management software and solutions specialist CA Technologies announced a
definitive agreement to acquire privately held Interactive TKO, a provider of
service simulation solutions for developing applications in composite and cloud
environments, for $330 million in an all-cash transaction. CA said the
acquisition will help customers overcome the limitations of current
organizational approaches, breaking down the silos across development, testing
and operations.
On
an unaudited basis, for the trailing 12-month period ending March 31, 2011,
ITKO reported revenue of approximately $39 million, more than doubling the
prior 12-month period. For this same period, ITKO was highly profitable and
generated positive cash flow. Including transaction-related expenses, the
transaction is expected to be slightly dilutive on a non-GAAP basis and
dilutive on a generally accepted accounting principles (GAAP) basis to CA
Technologies earnings per share in fiscal year 2012.
The
transaction also is expected to be accretive on a non-GAAP and dilutive on a
GAAP basis to CA Technologies earnings per share in fiscal year 2013. The
acquisition is expected to be completed within three months, pending regulatory
approval.
“We
are thrilled to join CA Technologies because it gives us a tremendous platform
to take our growth to an entirely new level,” said Shridhar Mittal, president
and CEO of ITKO. “Combining LISA with CA Technologies world-class IT management
will give our customers a solution that is ready for where they’re going, not
limiting them to where they’ve been.”
At
the close of the transaction, Mittal will join CA Technologies as general
manager of ITKO, a division of CA Technologies. It is anticipated that all of
ITKO’s approximately 120 employees will join CA Technologies. The acquisition
is a continuation of CA Technologies’ strategy that balances investments to
grow the company with returning cash to shareholders. So far in its 2012 fiscal
year, the company has repurchased $150 million of its common stock.
ITKO’s
LISA solution enables organizations to “mock up” a service at enterprise speed
and enterprise scale—even if the application is unfinished or unstable or the
physical resource is unavailable. LISA, which is used by more than 125
enterprise customers, virtualizes an environment by simulating the behavior of
external services without actually invoking them—e.g., how a checkout or
fulfillment process should interact with a service, without actually
authorizing a credit card or putting a box on a truck.
“The
addition of ITKO to CA Technologies will extend our ability to deliver a
complete set of capabilities to help our customers and partners to increase
their adoption and value from cloud-based applications,” said David Dobson,
executive vice president of the customer solutions group at CA Technologies.