A South Carolina company that develops software for nonprofit groups said yesterday it will pay $46 million in cash to acquire San Diego rival Kintera, which has been struggling to stem its losses.
The offer from Charleston-based Blackbaud amounted to $1.12 per share, a 65 percent premium for Kintera's languishing stock, which closed yesterday at 68 cents a share. A year ago, stock in the company was trading at $1.68 a share.
At that time, Kintera had trimmed its work force by 16 percent and Chief Executive Richard LaBarbera was streamlining business operations after replacing the company's founder in a March 2007 management shake-up.
Kintera provides Web-based software and services used by nonprofit organizations and other customers for fundraising campaigns. The company has reported it had an accumulated deficit of $148 million as of March 31.
Blackbaud no doubt views Kintera's 3,900 customers, which include the American Lung Association, Lance Armstrong Foundation and Big Brothers Big Sisters of America, among its prized assets.
But LaBarbera said yesterday that Blackbaud plans to maintain Kintera's operations in San Diego and that the Charleston software developer values Kintera's in-depth knowledge of Internet marketing, engagement and fundraising.
“It's not just customers,” LaBarbera said. “It's really about the technology. I know that they're also very excited about the knowledge, people and organization.”
Blackbaud, which reported first-quarter sales of $69.4 million, provides software and services that enable nonprofit organizations to increase donations, manage finances and improve communications with their constituents. The company has about 19,000 customers.
Blackbaud said the deal will be financed with cash on hand and borrowings from its credit facility. The tender offer is expected to close by about July 2.
The buyout closes a turnaround effort that cut Kintera's losses by 52 percent in 2007. But the company still posted a loss of $15.8 million, or 39 cents a share, for the year ended Dec. 31. Kintera posted a loss of $4.2 million, or 11 cents a share, in the first quarter, which ended March 31.
The company also said it lost two large customers at the end of 2007, and its first-quarter revenue declined 17 percent to $8.9 million. After trimming its work force by an additional 14 percent May 6, Kintera now has 240 employees, including 146 in San Diego.
On April 2, Kintera was notified by the Nasdaq stock market that it had fallen out of compliance with rules requiring a minimum $1-per-share price for the company's common stock. On May 21, Nasdaq told Kintera it failed to meet rules requiring minimum stockholders' equity of $10 million.
It might seem that time was running out, but Kintera's LaBarbera said, “In my opinion, this wasn't a nick-of-time thing we had to do.”
LaBarbera added: “This is a combination of two great technological solutions and two companies that have a pretty good fit. Sometimes you need a bigger boat to get across the lake.”
Bruce Bigelow: (619) 293-1314; bruce.bigelow@uniontrib.com
