NICE Double Dips and Shops in Its Home Market

Sep. 2.09 | About: NICE-Systems Limited (NICE)

by Brenon Daly

Less than three months after indicating that it was looking to step back into the M&A market, NICE Systems (NASDAQ:NICE) announced two deals back-to-back. The Israeli company reached for Hexagon System Engineering on Monday, and followed that up immediately with the much more substantial purchase of Fortent. Together, the transactions run NICE’s tally of acquisitions to a baker’s dozen since 2002.

Hexagon will add location-based services technology for cell phones to NICE’s portfolio. NICE will hand over $11m in cash for Hexagon, which we estimate was generating revenue in the low single digits of millions of dollars. As an aside on this deal, we would note that it marks the first time that NICE has shopped in its home market. (Although Actimize, NICE’s largest target, was founded in Israel and still does much of its R&D there, Actimize had moved its corporate headquarters to New York City several years before NICE picked it up.) In its other acquisitions, NICE has been a bit of a globetrotter, buying companies based in Australia, the Netherlands, Germany, the UK and the US.

Meanwhile, NICE (through its Actimize subsidiary) will pay $73.5m in cash for Fortent. We estimate that Fortent was running at about $30m in revenue, with most of that coming from sales of its anti-money-laundering (AML) product. Actimize competed with Fortent in the AML market, but also offers products for fraud detection and trading compliance. Actimize, which NICE acquired in July 2007 for $280m, has now inked three deals as part of NICE. The Actimize business, combined with Fortent, is expected to top $100m in revenue next year, roughly triple where it was when NICE bought it two years ago.