Stock Watch: Kana Buys Silknet

Shares of Silknet Software (Nasdaq: SILK), which provides e-commerce, marketing and customer support services, soared 26 percent in early trading today. Silknet gained 36 to 174-1/4 after customer relationship management software company Kana Communications (Nasdaq: KANA) announced that it will buy the company for about $4.2 billion in stock. Shares of Kana were down 14-7/8 to 244 in early trading.

Kana is paying a significant premium for Silknet, but can afford it. Even after the decline in its stock price this morning, Kana had a market value of about $7 billion. That figure is not bad at all for a company that went public at $15 a share in September. Silknet has also been a high-flier since going public at $15 in June. The combined company could well become an e-business solutions powerhouse.

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