Click2Learn Inc. and Docent Inc. agree to merge

Weekly Corporate Growth Report, Oct 27, 2003

The Deal: Click2Learn Inc. and Docent Inc. have agreed to merge into a new company in a stock deal estimated to be worth more than $105 million. When the deal closes, Click2Learn shareholders will receive .4144 shares of the new combined company in exchange for each share of Click2Learn and Docent shareholders will get .9525 shares of the new company for each Docent share. Click2Learn is slightly larger in revenues, employees and customers. Therefore, its shareholders will own slightly more of the new company. After closing, Click2Learn shareholders will own about 52 percent of the combined company while Docent shareholders will own the remaining 48 percent. Shareholders will vote on the deal early next year. The transaction is expected to close in the first quarter of 2004.

Discussion: Both companies are enterprise software developers specializing in the educational market. The combined company will have $40 million in cash and about 600 customers worldwide, the largest customer base in the industry.

Kevin Oakes, the chairman and CEO of Click2Learn will be the president of the combined company, which has yet to be named. Docent president and CEO R. Andrew Eckert will be the CEO of the new firm. The combination is expected to reduce sales, marketing, and operating expenses by $15 million, making the two unprofitable companies profitable fairly quickly.