Managed services News
Kaseya-Datto: SEC Filing Reveals Private Equity Interest Behind The Scenes
Joseph F. Kovar
While Kaseya’s private equity owner was the first to reach out to Datto to talk about an acquisition, the timeline released by Datto via an SEC filing shows that several private equity companies were pursuing the company as well.
April 2022
The legal counsels for both the Consortium and Party C submitted revised drafts of their merger agreements.
On April 4, the transaction committee met with members Datto management and representatives from Kirkland & Ellis and Qatalyst Partners to discuss the latest bids.
Later that day, at the direction of the transaction committee, Kirkland & Ellis told the Consortium’s legal counsel that it would have to modify its proposal to address regulatory issues related to a transaction involving Datto and Kaseya and to provide clarity on the financing of the deal. Kirkland also provided feedback to Party C on its proposal.
On April 7, the Consortium dissolved when Kaseya Parties told Qatalyst Partners that it was no longer partnering with Party B. Later that day, Kaseya Parties proposed acquiring 100 percent of Datto for $35 per share. Meanwhile, Party C told Qatalyst Partners that any bid it submitted would be below its prior valuation, which Qatalyst Partners said would not be accepted. Later that day, Party A withdrew its interest in a transaction for Datto.
The Datto board of directors on April 8 met with Datto management and representatives of Kirkland & Ellis and Qatalyst Partners to discuss Kaseya Parties’ proposal, the withdrawal of other parties that had considered a transaction with Datto, the fact that a robust outreach to potential bidders had been taken, and the fact that no additional bidders had come forward following public news reports that Datto was considering a potential transaction. Given all that, the board decided to consider a transaction. Qatalyst Partners, at the request of the board, later that day told Evercore that if the Kaseya Parties increased its bid to $35.50 per share and improved certain key contractual points, the board was prepared to move forward with Kaseya Parties to seek to sign and announce a transaction before the market opened in the U.S. on Monday, April 11.
Datto’s board and the compensation committee on April 8 approved a grant of 200,000 restricted stock units to Weller, saying it aligned Weller’s compensation with market practices.
Representatives of Kirkland and the Kaseya Parties’ legal firm along with members of Datto’s management team on April 9 and April 10 communicated numerous times and exchanged revised drafts of the merger agreement and other documents. Qatalyst Partners on April 10 reviewed its financial analysis of the proposal with Datto’s board of directors.
Datto’s board very early on April 11 met with the company’s management and with representatives of Kirkland & Ellis and Qatalyst Partners in attendance to get a final update from Kirkland & Ellis and Qatalyst Partners. After that, Datto and Kaseya Parties executed the merger agreement and issued a joint press release announcing the agreement prior to the opening of the U.S. stock exchanges on April 11, 2022.
