Diligent shares soar 26% after takeover offer valuing company at $941 mln
Shares in New York-based and NZX-listed Diligent Corp [NZX: DIL] soared and are currently up 26%, after news it's being acquired by venture capital firm Insight Venture Partners in a deal that values the governance software developer at $941 million.
Under the terms of the agreement, Diligent shareholders will receive $7.39 ($US4.90) in cash per share, which is a 31% premium to the closing share price on Friday of $5.64, the company said in a statement to the NZX.
The shares have traded as high as $7.18 this morning before settling back to $7.11, a value not reached since June 2013.
"It's good to see some recognition of the underlying quality of Diligent's business," said Shane Solly, portfolio manager at Harbour Asset Management, which owns 10.7% of Diligent.
The Diligent board has unanimously approved the transaction and recommends shareholders vote in favour of the agreement.
Diligent listed on the New Zealand stock exchange in December 2007 at $1 per share. The company, then known as Diligent Board Member Services, raised $24 million in an initial public offering of 23% of its shares.
"The $US4.90 per share transaction we are proposing to shareholders represents the culmination of nine years of unrelenting effort by the Diligent team to build a world-class company that is the leader in its space," said chairman David Liptak. "In addition to being a terrific result for all of our stockholders, we believe this transaction will provide Diligent with the financial flexibility to continue executing on its long-term vision, which we believe will benefit both clients and employees."
Diligent chief executive Brian Stafford said the company's game plan won't change as a private company – it wants to be the leading provider of collaboration software for boards, committees and leadership teams.
Mr Stafford and the current senior management team will continue to lead the business after the transaction closes.
Insight Partners managing director Deven Parekh said Diligent leads its market with more than 3500 clients and tremendous innovation and service.
"The company's recent performance in accelerated quarterly bookings, new product launches and its recent acquisition of Thomson Reuters' BoardLink business demonstrate strong momentum," he said.
The transaction is subject to the approval of a majority of Diligent shareholders and at least 60% of those holding preference shares, along with regulatory approval. One of the conditions is that the existing directors will resign once the deal is closed.
The holders of Diligent's preference shares, including Spring Street Partners LP, Diligent's largest shareholder, have entered into voting agreements in support of the transaction.
A special shareholders meeting will be scheduled as soon as practicable following the preparation and filing of definitive proxy materials with the US Securities and Exchange Commission and the New Zealand Stock Exchange.
The deal is expected to be competed in the second quarter of this year.
Diligent's financial results for the year ending December 31 are due out next Monday. The company currently has nearly $US100 million in annual recurring revenue.