Progress Software Corporation (NasdaqGS:PRGS) entered into a definitive agreement to acquire KEMP Technologies, Inc. from a group of sellers for approximately $260 million on September 23, 2021. The purchase price is financed by $384 million of existing cash and approximately $100 million of revolving credit facility. KEMP has approximately $70 million in revenue and operating margins of over 40% after cost synergies.

The transaction is subject to obtaining regulatory approvals, the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, execution of escrow and employment agreement, resignation of target's directors and satisfaction of other customary closing conditions. The acquisition is expected to close in quarter 4, 2021. As per the article of KEMP Technologies website, the acquisition is expected to close in October 2021.

The acquisition of KEMP positions Progress Software exceptionally well for 2022 and beyond. Acquisition of KEMP creates shareholder value while adding scale. The transaction is expected to be accretive to both non-GAAP earnings per share and cash flow, beginning in the fourth fiscal quarter of fiscal 2021.

KEMP roic is above the Progress weighted average cost of capital. Based on expected closing date KEMP will be part of Progress for 1 month in financial year 2021 with $4 million to $5 million as non-GAAP revenue contribution and $0.01 as non-GAAP net income per share. Lincoln International LLC served as the exclusive financial advisor to KEMP.

Hal J. Leibowitz andrew Bonnes of Wilmer Cutler Pickering Hale and Dorr LLP served as a legal advisor for Progress Software Corporation. Benjamin Kozinn, Michael A. Brosse, Gina M. Seong, Michael Walutes, Megan Monson, Bryan Sterba, Jeffrey M. Shapiro, Mark P. Kesslen, Eric Jesse, Gavin J. Rooney and Doreen M. Edelman of Lowenstein Sandler LLP served as a legal advisor for KEMP.