Aladdin Knowledge Systems To Be Acquired By Vector Capital Affiliate

Aladdin Knowledge Systems has entered into a definitive merger agreement to be acquired by an investor group led by Vector Capital, a private equity firm specialising in the technology industry, in a transaction valued at approximately $160 million.

Under the terms of the agreement, Aladdin shareholders will receive $11.50 per share in cash for each share of common stock they hold. This represents a premium of approximately 20 percent over Aladdin’s closing share price on January 9, 2009, the last trading day prior to the above announcement, and a premium of approximately 64 percent over Aladdin’s closing share price on January 5, 2009, the last trading day prior to Aladdin’s announcement that it was in continuing discussions with Vector Capital regarding a possible strategic transaction.

“After extensive negotiations and careful and thorough analysis, conducted with our independent advisors, the Board has unanimously endorsed this transaction as in the best interests of the company and our shareholders,” said Yanki Margalit, chairman and CEO of Aladdin Knowledge Systems.

David Fishman, partner, Vector Capital, said, “We are very excited about adding Aladdin to our portfolio of technology companies and believe that placing Aladdin’s DRM and authentication assets under common management with those of our portfolio company, SafeNet, a player in information security, makes considerable strategic sense and will greatly benefit all stakeholders. We understand Aladdin’s industry and business well, and look forward to working collaboratively to ensure a smooth and expeditious transition.”