British automated enterprise software company Blue Prism Group plc, on Wednesday, Oct. 6, defended its £1.1 billion ($1.5 billion) sale to Vista Equity Partners LLC, responding with a three-point rebuttal to claims by activist investor Coast Capital LLC that the takeover undervalued the company.
Blue Prism claimed, on the contrary, that Vista’s offer provided “greater value and less risk than Blue Prism’s current standalone prospects and potential standalone alternatives.”
“While Coast indicated that it has ‘communicated the operational improvement plan developed with sector experts and prior management team members over several months’, it has not yet provided the company with a detailed plan, including the financing of any such plan, capable of assessment by Blue Prism’s board,” said Blue Prism in an additional swipe at the activist.
Coast’s James Rasteh on Thursday, Sept. 30 issued a letter opposing the sale and contending that Blue Prism had not run a fully-fledged strategic review process.
The letter also questioned the board’s independence.
“The proposed transaction leads shareholders to question the board’s clear conflict of interest in unanimously supporting a transaction which values the company materially below consensus valuation, 52-week high, and its average price since IPO,” Coast said.
Rasteh later told The Deal that Coast would engage with proxy advisers Glass, Lewis & Co. LLC and Institutional Investor Services Inc. as part of a campaign against the “ill-conceived” Vista Equity transaction.
Which side is really looking at the deal through a distorting prism will ultimately be decided by shareholders later this year.
Blue Prism, on Wednesday, was sweeping in its rejection of Rasteh’s claims. It said its sale process had been supported by its independent advisers, Qatalyst Partners Ltd., BofA Securities and Investec Bank plc, was extensive and thorough, had involved an extensive market feedback over four months and included “outreach to 15 strategic parties and 12 financial sponsors.”
The latter had included both Vista and TPG Capital LLP, both of which had submitted non-binding offers before Vista submitted a final proposal, announced on Sept. 28, “which was both the highest in the process and superior to the Company’s standalone alternatives.” TPG at that point chose not to make a higher offer and had walked away.
Blue Prism noted that parties previously contacted by its financial advisers, or any other interested party was free to make a superior offer — with the exception of TPG, which can only return in certain limited circumstances under U.K. Takeover Panel rules. The board could switch its recommendation to a higher offer without incurring any termination fee.
In a second section of the rebuttal, Blue Prism said the Vista offer represented a 35% premium to Blue Prism’s undisturbed closing price on Aug. 27 was and 34% higher than its weighted average closing price for the previous three months.
It also represented a multiple of 5.8 times revenue for the 2021 financial year.
The third segment dealt with the claim of conflicts of interest and the strength of the board. Blue Prism said it had responded to shareholder feedback by adding three independent non-executive directors this year all of whom had been involved in the shareholder consultation, the strategic review and the assessment of the Vista offer. Directors who held shares in the company had pledged to vote in favor of the Vista offer, so that they were aligned with the interests of the company’s shareholders.
And it stressed that none of the board was subject to any conflicts relating to Vista or its offer. Nor were there any conflicts relating to Tibco Software Inc., a Vista portfolio company which the private equity firm says it plans to combine with Blue Prism ahead of a sale, possibly within the next 12 months.
In addition, it said, Coast’s assertions of conflicts of interest on the part of independent director Murray Rode were “entirely unfounded.”
Rode was Tibco CEO from 2014, the year that the U.S. company was acquired by Vista, until April 2019, according to data from Boardex, a relationship mapping service and a sister company of The Deal. He then served as Tibco vice chairman until the end of that year. He joined the Blue Prism board in February 2021.
Blue Prism said Rode “has not been employed by Tibco since 2019, has no financial interest in either Tibco or Vista affiliates, and played no role in the outreach or interactions with Vista and Tibco.”