Thursday, May 29

Blackbaud announces acquisition of Kintera

...and then there were two.

In news just hitting the wires... Blackbaud announced today they are buying Kintera as an all-cash tender offer for all of the shares at a price of $1.12 per share.

Tim Williams, Blackbaud's Senior Vice President and Chief Financial Officer, stated, "In addition to the strategic reasons supporting the acquisition of Kintera, we believe the acquisition is attractive from a financial perspective as well. 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. 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 Blackbaud’s 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.”
While the press release seems almost giddy, I'm not so sure nonprofits will be thrilled that their viable options for major providers continues to shrink. If I was a shareholder in BLKB, I would be concerned that $46 million is too much to pay for a provider that seemed destined to go out of business anyway.

Although, the only people who will suffer more than nonprofits looking for competition in the marketplace will be the folks at Convio who must be shitting themselves.
Kintera will continue to be led by its current President and CEO, Richard LaBarbera. The company is expected to formally launch the tender sometime next week and close on or around July 2.

UPDATE: 1232AM = Steve MacLaughlin at Blackbaud's Connections blog points out that:

Because both Blackbaud and Kintera are publicly traded companies there are very specific Federal Trade Commission rules about what can be said and done until the deal officially closes. This may take as many as 30 days and until then both companies will perform as separate units, competing with each other as they did prior to this announcement.
He goes on to say:

* Blackbaud becomes the leading provider of online solutions and services to the nonprofit industry with over 4,500 clients

* Both
Kintera Sphere and Blackbaud NetCommunity are strong Internet solutions that largely serve very different segments, including The Raiser’s Edge, Team Approach, eTapestry, and non-Raiser’s Edge customers.

* Blackbaud plans to continue to support and invest in both products.

* Kintera’s other offerings, FundWare, P!N and certain capabilities within Sphere (e.g., Friends Asking Friends) are well-recognized and respected in the marketplace.
Hmmmmmm. Interesting.


Anonymous said...

Wow. That's big news.

Anonymous said...


"a fundraiser" said...

from the press release:

Kintera’s principal offering is its online Sphere® technology platform, which is used by such leading organizations as American Lung Association, Big Brothers Big Sisters of America, International Fund for Animal Welfare, Lance Armstrong Foundation and Sesame Workshop to manage online fundraising events and in 2007 processed over $400 million in online gifts. The company also offers wealth profiling and screening services as well as an accounting software solution, both similar to offerings of Blackbaud. With approximately 4,000 customers, Kintera is recognized for the proven capabilities of its Sphere® SaaS offering that has allowed nonprofits to effectively grow their base of supporters and expand their online fundraising initiatives. The company reported $44.9 million in total revenue for 2007.

Anonymous said...

I thought KNTA was about to be delisted anyway frm the stock market?

Peter Gulka said...

Chances are they are buying the software platform more than anyhting. That would just be a guess though.

I have no idea if there is a Kintera User Society, but we at the Blackbaud User Society would be thrilled to have Kintera clients join us to get unofficial support for their products and join our growing community of Blackbaud clients and users.

Anonymous said...

I think it improves prospects for nonprofits because it strengthens one of the major online all-in-one solutions -- Kintera. Gives them long term stability. BB really wasn't an alternative from a technology standpoint...

There are still plenty of options out there. Salesforce, mPower, CiviCRM, and their multiple CMS hybrids, to name a few, and Convio. It's true that the number of all-in-one solutions diminishes, but that's kind of bogus concept anyway.

Yes, Kintera probably would have been delisted -- they have been driving stock and headcount down for a while now to make themselves a better acquisition target.

Peter, they're buying the software, the clients *and* the expertise -- consulting and technology expertise. Kintera clients did 400 million in online donations last year, so those folks must know something.

Anonymous said...

The stock shot up the day of the announcement... if there really were rumors circulating about this acquisition for a week or so before the official news - I think the SEC should look into insider trading of the KNTA stock.