A quick post for today – in May’s monthly update, we received word that Sandvine (SVC) had received a buy-out offer from Vector Capital that was offered at a 20% premium (@ $3.80) to the day’s before closing price. We decided to wait it out as a TD Report suggested that another suitor could come out valuating the company 18% higher than the current bid.
It seems like TD knew what it was talking about as not only did Sandvine receive a new offer that was 9% higher (@ $4.15) than the Vector Capital bid, but was also from Francisco Partners – the private equity firm referenced in the same report comparing the evaluation of a similar takeover!
Vector Capital then came back with a matching offer that the company deemed to be superior to Francisco’s offer despite coming in at the same price. While there was no difference to shareholders like myself, the Vector proposal offered Sandvine executives their shares to be converted or retained as Vector Capital shares – which allowed them to obviously partake in what could be future appreciation of those shares.
Well, Francisco Partners came back today with a 6% higher offer (@ $4.40) and it’s funny how the company’s board continues to recommend the Vector deal over Francisco – which I guess the company is keen to partner with. In any event, it looks like Vector has until July 14 at 5:00PM EST to at least match the deal which from previous actions, sounds like the most they would do.
In every respects, this reminds me of a similar battle that happened with KEYReit (KRE.UN) where ultimately the REIT was sold at a 40% premium after a 2 month back and forth between two suitors. Just like there was just like there was some interesting tidbits back then, there’s some interesting viewpoints that might impact us as shareholders. One is an article regarding Francisco’s subsidiaries and potentially using Sandvine’s technology for “dual-use” purpose – where the subsidiaries have been accused of selling technology to foreign countries that have leveraged that technology to potentially abuse human rights.
The second more interesting one is around a buy-out in 2006 in where these two private equity firms are no strangers to each other. Initially, I was thinking of just holding on and sitting back with some popcorn and watching the fireworks fly. Given this information of past dealings, I might be inclined to sell early next week when the share price likely hits $4.40 or higher (and lock in the 40% gain) than worry about a potential replay and a drop back to the initial bid 12% lower.
[Ed Note 10-Jul-17]: With the stock trading at $4.45 this morning (above the current bid), we’ve sold have our shares and will continue to monitor the story line as it unfolds. At this point, I don’t think the end price will be significantly higher.