Carlyle to buy Open Solutions for $1.3 bn

Open Solutions Inc. being bought out by Carlyle Group and Providence Equity Partners Inc. for about $1.3 billion including debt as buyout firms take over technology companies at a record pace this year.

The takeover is taking place with $784.7 million changing hands, as well as the assumption of debt, with Open Solutions going for $38 a share, 25 percent more than the stock's closing price.

The agreement also lets holders of Open Solutions' debt to convert their bonds into stock, valuing the total deal at $1.3 billion.

It was founded in 1992, and provides database products that enable banks, credit unions and manage Internet banking, accounting and digital documents and has 1,700 employees in nearly two dozen offices around the country as well as in Canada and India.

The transaction follows last year's $11.4 billion takeover of Sungard Data Systems Inc., which like Open Solutions provides software for financial-services companies, by a group of seven buyout firms.

The transaction is expected to be completed during the first quarter of 2007 and is subject to approval by the stockholders and federal regulators.

``We intend to support the continued growth and expansion of Open Solutions with aggressive investment in internal research and development, customer service and complementary acquisitions,'' Carlyle Managing Director Bud Watts said.

Of late, these firms are targeting software companies because their maintenance contracts generate stable revenue.

Buyout firms with access to cheap financing have announced more than $465 billion of purchases this year. Some have approached company executives with the promise that their businesses can do better as a private company.

Carlyle has invested $22.4 billion of equity in 528 transactions since its founding in 1987. Last year it raised $7.85 billion for the biggest U.S. buyout fund. Providence has invested in more than 80 companies since it was founded in 1990.