SonicWall Agrees To $717 Million Acquisition By Investor Group3:15 PM EST Thu. Jun. 03, 2010
SonicWall says its looking to expand and grow after it agreed to be acquired by an investor group led by Thoma Bravo in a deal valued at $717 million.
Under the terms of the agreement, SonicWall shareholders will receive $11.50 in cash for each share of SonicWall common stock held, which represents a premium of approximately 28 percent over the company's most recent closing price.
The deal received unanimous approval from the SonicWall Board of Directors, but has yet to be approved by the company's shareholders.
The investor group, led by Thoma Bravo, includes the Ontario Teachers' Pension Plan through its private investor department, Teachers Private Capital.
The transaction, which is expected to close between September and December of this year, is subject to customary closing condition, such as regulatory and shareholder approvals.
Executives maintain that the transaction wasn't a reactionary move to impending financial trouble. Thus far, the company experienced solid financial growth. During its April earnings call, the company reported more than 17 percent year-over-year growth, a year-over-year increase in net income to $4.4 million from $1.7 million, and more than $213 million in cash.
SonicWall executives contend that the deal, should it be approved by shareholders, would be a good move that will give the company significant financial freedom and flexibility, as well as greater purchasing power for future acquisitions, which will ultimately enable it to grow and expand into more enterprise-level accounts.
"We intend to grow both organically and we'd like to see the opportunity for inorganic opportunities as well to buy and build," said Patrick Sweeney, SonicWall vice president of network security business unit. "This means there's very good return for shareholders and investors and opportunity to make it a larger more successful company."
Sweeney said that turning over the company to an investment firm likely wouldn't have a negative impact on its channel, and also said that Bravo probably wouldn't dismantle or reduce the company's channel program.
"If you look at (Thoma Bravo's) history, their history is to leave management intact, running it exactly as it was running," Sweeney said. "They buy us for what we have, and what we have is a fantastic channel. You can assume that the most likely outcome of all this is simply the ability to run our business with greater flexibility."
Next: Other Partners Endorse Deal
But channel partners aren't so sure. Luigi Giovanetti, vice president of Woburn, Mass.-based CPU Sales and Services, said that the news came as a surprise and that he remains in the dark about the next moves for SonicWall and how the deal will impact its channel partners.
"We're a reseller. How are they going to control distribution? Are they going to eliminate the channel or leave us the smaller stuff?" he said.
"It could be anything. We have hundreds of customers and have invested thousands and thousands of dollars. We can't be left in the dark," he added.
Giovanetti said that SonicWall products comprise a significant portion of CPU's offerings, and he planned to remain a partner, in light of the fact that the company was a "very easy company to work with, friendly and listened to resellers input."
The fact that Thomas Bravo paid a 30 percent premium boded well, he said. "These days, buying companies doesn’t happen too often. When they're spending an extra 30 percent, that relieves me," he said. "We just have to sit and wait and see what happens."
Following the acquisition announcement, the law firm Ryan & Maniskas said it was investigating "whether the company undertook a fair process to obtain fair consideration for all shareholders of SonicWALL."