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San Ramon-based Caritor Inc.’s $854 million purchase of Keane Inc., announced earlier this year, would be a done deal by now � if the target company’s past hadn’t come back to bite it. Keane’s shareholders gave their approval this week, but before the deal can close, Keane has to show audited financial statements for 2006. Those can’t come out until the company’s internal investigation into its past stock option practices is complete. Caritor, a maker of business software, announced Feb. 7 that it would buy Boston’s Keane in an all-cash transaction priced at $14.30 per share. The purchase represents a 19 percent premium over Keane’s closing share price on the day before the announcement, Caritor said. Gregg Vignos, the lead Paul, Hastings, Janofsky & Walker partner on Caritor’s side, said that backdating problems tend to have little impact on a company’s ongoing operations. But the consequences do crop up, and when they do, an otherwise smooth transaction can suddenly come to a halt. “The problem we see with increased frequency is backdating issues are slowing down the deals,” said Vignos, who works in San Francisco. “Increasingly companies are facing the dilemma that they can’t close a deal without an audit, and they can’t close the audit without finishing up the investigations.” He said the question becomes whether the buyer, the bankers and the investors are willing to push the deal through without the audit. That is not an easy decision to make, he said, because no one knows the entire scope of the problem, given the inability of internal investigators to discuss their work during the course of a probe. “We’re trying to help people understand the risks and help the buyer make an informed decision about how to proceed,” Vignos said, but he hasn’t received any information yet about backdating. “It’s a bit frustrating,” he said, “but these things happen.” Rounding out the Paul, Hastings team were Silicon Valley partner David Dedyo and San Francisco associate Daniel Dashiell. Representing Keane was a Boston team of Wilmer Cutler Pickering Hale and Dorr attorneys.

Petra Pasternak

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