Nice Nears $2 Billion Sale of Actimize Unit to Brookfield

Israeli software company Nice is reportedly close to selling its Actimize fraud detection and compliance unit to Canadian investment giant Brookfield for approximately $2 billion. This figure represents a $500 million decrease from initial non-binding bids received from five private equity firms, which ranged around $2.5 billion. Brookfield, which manages over a trillion dollars in assets globally, is pursuing the acquisition through its financial infrastructure arm, led by Ron Kalifa.

Actimize, acquired by Nice in 2007 for $280 million, develops cloud-based systems for fraud detection, anti-money laundering, and regulatory compliance, serving banks and financial institutions worldwide. The proposed sale price of $2 billion reflects a sevenfold increase on the original purchase price, valuing the unit at just over four times its annual revenue of approximately $480 million. This valuation multiple is considered standard for moderately growing software companies, focusing on sales rather than profit.

The sale is significant for Nice, as Actimize accounted for about 16% of its quarterly revenues, totaling $119 million with 7% growth. The company's core business remains cloud-based customer service solutions, which constitute the remaining 84% of its revenue. Despite exceeding revenue and profit expectations in the last quarter, Nice's stock has seen a decline over the past year.

The $2 billion deal, before taxes, represents about 30% of Nice's market capitalization. How Nice will utilize these funds, whether through share buybacks, further acquisitions, or shareholder distributions, is yet to be determined. The exclusive negotiations with Brookfield are not yet finalized and could potentially fall through, in which case Nice may re-engage with the other interested private equity firms.