Tag: IMNY

Take-privates are taking more money

Brenon Daly

Contact: Brenon Daly

Even though the volume of take-privates has plummeted this year, the deals that are getting announced appear to be far more competitive than they’ve ever been. At least that’s true after the LBO is announced. So far this year, we’ve seen terms get raised in four take-privates, due to either named or unnamed bidders.

The latest: On Tuesday, an unidentified private equity (PE) firm offered $8 for each share of MSC Software, topping the existing agreement for $7.63 per share that buyout shop Symphony Technology Group had with the maker of design software. The new bid added about $18m to the price of MSC. That follows post-announcement raises in the LBOs of I-many and Entrust, which increased the final purchase prices by $19m and $9m, respectively. And then there was the bidding war over SumTotal Systems between Vista Equity Partners and Accel-KKR that saw the final price come in 50% higher than the initial offer.

But in the case of MSC, we probably shouldn’t be surprised that the initial offer got bumped a bit higher. After all, it was only a scant 13% premium over the previous closing price. Shares of the company actually traded at the price proposed by Symphony just a month before the PE shop unveiled its bid. Although to be fair, much of the run had been triggered by speculation that hedge fund Elliott Associates, the vendor’s largest shareholder, was pushing for a sale of MSC. (Under the plan put forward by Symphony, Elliott would have rolled over its equity.) For the record, the proxy filed in connection with Symphony’s bid indicates that Elliott actually first broached the idea of a sale to MSC in February 2008, a time when shares were changing hands above $12 each.

Second time’s a charm for I-many?

Brenon Daly

Contact: Brenon Daly

As it reported its first profit since going public in 2000, I-many also said Wednesday that it will be going private in a $36m buyout by LLR Partners. The Philadelphia-based buyout shop – led by Greg Case, who joined LLR from Apax Partners last fall – offered 43 cents for each share of I-many. (Montgomery & Co banked I-many, with Rob Louv, John Cooper and Joe Morgan handling the mandate.) We understand that a number of other private equity firms looked at I-many, with the process picking up momentum at the end of last year.

While the proposed acquisition is slated to close this summer, it still has to clear a few hurdles. For starters, terms can change if I-many’s cash holdings dip below $8m before the deal closes. The company, which held $9m in cash at the end of the first quarter and expects to generate cash every quarter this year, said in a conference call that the $8m requirement is a ‘conservative’ level. So it shouldn’t have trouble hitting that. Indeed, I-many shares were trading in line with LLR’s offer on Thursday.

The other big obstacle is a shareholder vote. Since the offer represents a 70% premium over where I-many’s shares were trading before the bid, one might think that a sign-off is automatic. But I-many’s shareholders have already shot down one offer. In December 2004, Selectica bid some $70m for I-many. That offer didn’t make it through because I-many’s shareholders said it undervalued the company. Indeed, a year and a half later, I-many shares had doubled.

The end of 2007, however, proved to be the high-water mark for shares of I-many. From more than $3, they dropped to a low of about a dime late last year. The company was in danger of getting delisted from the Nasdaq, which would have accelerated the payment of the notes that it sold in December 2007. According to terms, note holders have agreed to hold off on that, and will redeem them when the deal closes.