Thoma Bravo snags Coupa for $8B regardless of activist strain to carry off for larger value

When news surfaced final week that activist traders have been taking the bizarre step of pressuring Coupa Software to not promote for lower than $95 a share, it bought our consideration. You don’t usually see traders sending a letter asking an organization to carry off on a sale. It’s sometimes the alternative.

But right now, the corporate introduced that Thoma Bravo was buying it for $8 billion. That works out to $81 a share, which nonetheless represents a 77% premium for shareholders, however effectively under what HMI Capital was asking for in a letter made public earlier this month.

The letter believed revealed rumors that one other personal fairness firm, Vista Equity Partners, was within the hunt to purchase it, however in the long run, Thoma Bravo was the customer together with an entirely owned subsidiary of the Abu Dhabi Investment Authority (ADIA) additionally collaborating within the deal as a minority investor. Thoma Bravo has an extended historical past of buying mature enterprise software program corporations and taking them personal.

Coupa, which makes spend administration software program for big companies, has been having a tough yr within the inventory market, like many SaaS corporations, feeling the wrath of traders on the lookout for revenue over development. The firm’s inventory value was down 64% year-to-date and was down over 2.5% in pre-trading, suggesting that maybe traders aren’t proud of the deal.

Company CEO Rob Bernshteyn put a contented face on the deal as you’d anticipate, saying that clients can anticipate the same stage of service, no matter who the proprietor is signing the checks.

Roger Siboni, Coupa’s lead unbiased director stated that the corporate took into consideration the present financial local weather and determined it was a deal price taking. “The Board evaluated the transaction against the company’s standalone prospects in the current macroeconomic climate and determined that the compelling and certain cash consideration in the transaction provides superior risk-adjusted value relative to the Company’s standalone prospects. The Board is unanimous in its belief this transaction is the optimal path forward and in the best interest of our shareholders,” he stated in an announcement.

While the board of administrators has unanimously agreed to the phrases, it ought to be fascinating to see if the shareholders are as pleasant to the deal after they meet early subsequent yr. It would appear that HMI Capital, which owns 4.8% of the Coupa inventory, will lead the cost towards the deal if the letter the agency revealed is any indication of its emotions concerning the firm being undervalued at this value.

Should the deal move muster with stockholders and regulators, it’s anticipated to shut within the first half of 2023. Surprisingly, given HMI’s letter, there isn’t any go-shop provision with this deal, which might permit Coupa to maintain on the lookout for a greater deal.