The latest development at press time was Vista Equity’s move on May 20 to increase its offer for SumTotal to $4.85 a share in cash, valuing the Mountain View, Calif.-based provider of learning and performance management software at $163 million. Vista Equity also expressed a willingness to boost its consideration to $4.95 per share if the breakup-fee in SumTotal’s amended merger agreement with Accel-KKR is invalidated or reduced to the original amount.
The offer was a rapid response to Accel-KKR’s sweetened offer of $4.80 a share on May 19. That bid marked a 140 percent premium above SumTotal’s closing stock price on April 3, the last trading day before disclosure of its initial agreement with Accel-KKR. The stock was changing hands at $4.88 in intraday action on May 20. As part of its acceptance of the sweetened offer from Accel-KRR on May 19, SumTotal amended its merger agreement to include a termination fee of $6.67 million if it accepts a superior proposal from any other party.
Vista Equity, which currently owns a roughly 13 percent stake in SumTotal, originally offered to acquire the company for $3.25 per share on April 6. Menlo Park, Calif.-based mid-market buyout shop Accel-KKR then countered with an offer of $3.80 per share, which valued SumTotal at around $124 million, and the parties reached a definitive agreement on April 24. In early May, Vista Equity, which is headquartered in San Francisco, lifted the stakes even further and eventually arrived at a $4.75 per share proposal that led Accel-KRR to take its offer up to $4.80 per share on May 19.
SumTotal can continue to solicit alternative proposals from third parties until May 24, according to its agreement with Accel-KKR. RBC Capital Markets Corp. is advising the company on the sale. Formed in 2004, SumTotal posted a loss of $5.2 million for the first quarter ended March 31, down from its year-ago equivalent profit of $1.5 million. Revenue for the quarter totaled $23.7 million, off more than 20 percent from $36 million last year. The company said cash flow from operationg activities rose, however, to $4.1 million in the latest three months from $3.6 million a year ago.
As evidenced by the intense bidding, the company is an ideal target for Vista Equity and Accel-KKR, both of which target mid-market software companies. Accel-KKR typically invests in companies with annual revenues between $15 million and $150 million in software and Internet technologies. Vista conducts buyouts, growth acquisitions or financings, restructurings and spinouts, with a particular emphasis on software. Both firms were formed in 2000.
If you do not receive this within five minutes, please try and sign in again. If the problem persists, please
email: