Kana, Silknet Join in $4.2 Billion Merger

SAN MATEO (02/07/2000) - Kana Communications Inc. and Silknet Software Inc., two upstart e-business solution vendors in the electronic support, commerce, and marketing arena, have decided to tie the knot by agreeing today to a $4.2 billion merger.

The companies will look to combine Kana's automated e-mail customer communications system with Silknet's platform for Internet-based commerce and support applications. The merged company will aim to improve customer service on the Web and provide a single view of customer interactions across various sales and support channels, the companies said in statement.

"We saw a lot of synergy in the space as to what both of our [companies'] customers would want to do in the future," said Michael McCloskey, CEO of Kana.

"Several of our customers have the Silknet and the Kana solutions, like Microsoft and Priceline, so this is a naturally progressive move."

The combined companies hopes to take advantage of those synergies to establish a leadership position in the marketplace. According to McCloskey, the main competition in the e-business space is coming from in-house solutions. But given time-to-market issues that most companies are facing today, he sees the trend heading toward single-vendor solutions.

Officials from both companies said that each outstanding share of Silknet common stock will be exchanged for 0.83 shares of Kana common stock. The definitive merger agreement represents a 21 percent premium over the average exchange ratio for the last 30 days. In addition, all outstanding options and warrants to purchase Silknet common stock will be assumed by Kana, adjusted for the exchange ratio.

The new company will have a total of 625 employees and is likely to expand operations in both Manchester, N.H., and Redwood City, Calif. The deal will not be finalized until the end of the second quarter of this year.

Silknet Software Inc., in Nashua, N.H., is at www.silknet.com. Kana Communications Inc., in Redwood City, Calif., is at www.kana.com.

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