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Keane Taken Out

Privately held Caritor will buy the IT services outfit for $854 million.

Shares of



surged Wednesday after the company agreed to be acquired by fellow information technology firm Caritor for $854 million in cash.

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Caritor, a privately held company based in San Ramon, Calif., will pay $14.30 a share in the deal. The price represents a 19% premium over Keane's Tuesday closing price of $12.

"After careful consideration of the full range of strategic alternatives, the Keane board of directors concluded that this transaction is in the best interest of Keane's shareholders," Keane said. "As a private company, combined with Caritor, Keane will be better positioned to continue to invest in growth, provide new employee opportunities, and service its clients."

The boards of both Keane and Caritor have approved the transaction. Members of the Keane family and affiliated entities, who together hold about 20% of the current shares outstanding, have committed to vote in favor of the merger.

The combined company is expected to have annual revenue of more than $1 billion. Following completion of the transaction, the company will operate under the Keane name and maintain Keane's employee base in Boston. Caritor Chairman and CEO Mani Subramanian will become chairman and CEO of the combined entity

The deal is expected to close during the second quarter. Shares of Keane recently were trading up $2.17 to $14.17.