In a high-profile consolidation in the not-for-profit software arena, NFP vendor Blackbaud struck a deal to acquire struggling rival Kintera for roughly $46 million in cash, or $1.12 per share.The deal, which Blackbaud plans to finance with cash and its credit facility, was expected to close July 2.

Following the close of the deal, Kintera will operate as a division of Blackbaud from its home base in San Diego, where 146 of its 240 employees are located.

A Blackbaud spokesperson said that the company planned no post-merger layoffs.

Kintera will continue to be led by its current chief executive, Richard LaBarbera, who previously worked for IBM, Sybase and other high-tech companies. He will report to Blackbaud chief executive Marc Chardon, who said that the acquisition would help his company expand its online offerings.

Kintera, which specializes in online software for nonprofits and government entities, has roughly 4,000 customers. Like Blackbaud, which boasts a customer base of 19,000, Kintera competes against such nonprofit vendors as Serenic, Cougar Mountain, CYMA and AccuFund, as well as NFP products from larger financial and tax software publishers such as Intuit and Sage.

Kintera’s online Sphere technology platform and Friends Asking Friends system will join Blackbaud’s The Raiser’s Edge and NetCommunity products, but the companies said that it would probably take several years to integrate.

TOUGH TIMES FOR KINTERA

The sale comes at a time when Kintera had been facing daunting financial pressures, including the threat of a delisting notice from Nasdaq.

Nasdaq rules require companies to maintain a minimum of $10 million in equity, but in its latest quarterly report, Kintera had reported just $9.8 million in equity as of March 31. Prior to the news of the acquisition, Kintera had until May 30 to provide Nasdaq with a long-term plan to comply with the requirements or face delisting.

In April, Kintera received a notice that its stock price fell below the minimum threshold of $1.00 per share for 30 consecutive business days and faced delisting on that front.

Although Kintera managed to reduce its losses last year by 52 percent, it still lost $15.8 million in 2007 on overall revenue of $44.9 million.

However, Kintera’s sea of red ink stretches back literally to its founding in 2000 by doctor and local businessman Harry Gruber. The company has never posted a profit in any quarter since its inception, and had amassed debt of nearly $150 million prior to the Blackbaud announcement. Its stock price has plunged from a high of $17.29 a share in April 2004, to a pre-acquisition range below $1.

Over the past several years, Kintera had pared down its workforce from about 550 to its present count.

Gruber was ousted as chief executive in March 2007 at the behest of shareholders.

More than three years ago, Kintera acquired Colorado-based nonprofit software provider American Fundware from Intuit for $11 million in cash.

Meanwhile, for its first quarter ended March 31, 2008, Blackbaud reported total revenue of $69.4 million, with profits of $7 million.

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