Larger rival to buy Saf-T-Net

Blackboard agrees to a $33 million deal. It plans to keep Saf-T-Net workers and stay in Raleigh.

Staff WriterMarch 9, 2010 

Saf-T-Net, a rapidly expanding Raleigh company whose technology enables schools to communicate time-sensitive information to employees and parents, is being acquired by a larger rival.

Publicly traded Blackboard, which is based in Washington announced Monday that it has agreed to acquire Saf-T-Net for $33 million in cash. The deal is expected to be completed this month.

The deal combines the two largest competitors in the market, said Robert Bruce, co-founder and CEO of Saf-T-Net. The company, which is privately held , has 47 employees in Raleigh and 65 overall. Blackboard's Blackboard Connect product generates the most revenue by far of all the competitors, while Saf-T-Net's AlertNow technology has the most customers -- about 2,000.

"The synergies of these two companies are just fantastic," Bruce said. AlertNow delivers voice, e-mail and text messages to educators and parents, ranging from the routine to emergency messages.

Blackboard Connect is one of a number of products Blackboard offers to educators, including software used for teaching and learning online, and accounts for roughly 15 percent of the company's total revenue. Blackboard boasts that it's the largest technology company dedicated to the education market, including colleges and universities. It has 1,100 employees and generated $377 million in revenue last year, up 21 percent.

Blackboard plans to retain all of Saf-T-Net's employees and will maintain the company's presence in Raleigh. Saf-T-Now will become part of Blackboard's Blackboard Connect division, while the AlertNow product will be used to enhance Blackboard Connect.

AlertNow has some features that Blackboard Connect lacks, and vice-versa. For example, AlertNow, or example, can translate messages into multiple languages.

Michael Stanton, Blackboard's senior vice president of finance, said in a phone interview that Raleigh is a place where Blackboard anticipates expanding because of the area's attractive labor pool, favorable business climate and lower operating costs compared to Washington.

"It's an area where, economically, it clearly makes sense to staff up and grow," Stanton said. "I couldn't tell you if it is going to be 10 percent or 20 percent over the next 12 months, but we would expect to staff up."

Saf-T-Net generated $9.8 million in revenue in 2009, Stanton said. But under GAAP, or generally accepting accounting principles, Saf-T-Net will contribute $5.5 million to Blackboard's revenue this year, assuming the purchase is completed in late March.

Saf-T-Net isn't yet profitable but has been moving in that direction, Stanton said. Blackboard projects the acquisition will dilute its earnings per share this year and will have a positive effect next year, on a non-GAAP basis.

Saf-T-Net's revenue jumped 70 percent last year, said Bruce, the CEO, who credited the strength of the product and the company's focus on customer service.

Switching gears

The company began in 1996 as a data backup company but switched gears when its school customers said they needed a better way to communicate with parents.

Bruce said he and co-founder Howard Udell, Saf-T-Now's chairman, will remain as consultants through a transition period but ultimately plan to leave. Bruce declined to comment on his plans. Bruce said that he and Udellweren't seeking a buyer when Blackboard's CEO, Michael Chasen, initiated contact last summer. "It's been about a seven-month process," he said.

david.ranii@newsobserver.com or 919-829-4877

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