San Luis Obispo-based Mindbody has entered into an agreement to be acquired by San Francisco-based Vista Equity Partners, a private equity firm, for $1.9 billion, the company announced Monday.
The investment firm, which is “focused on software, data and technology-enabled businesses,” will acquire all outstanding shares of Mindbody stock at price of $36.50 per share, according to the company’s announcement. That’s a 68 percent premium to Friday’s closing price of $21.72.
This means the company, which went public in 2015, will return back to private ownership, with Vista owning 100 percent of the company.
The deal is expected to close in the first quarter of 2019 and includes a 30-day “go shop” period, where Mindbody can “actively initiate, solicit,” and encourage other acquisition proposals.
“We are thrilled to provide immediate liquidity to our shareholders at a significant premium to market prices and to leverage Vista’s resources and deep expertise to accelerate our growth while achieving that purpose more effectively than ever before,” said Mindbody CEO Rick Stollmeyer in the company’s release.
Brian Sheth, Vista’s president and co-founder, said in the statement that Mindbody’s “position as the leading technology platform for the fitness, beauty and wellness industries makes it an ideal addition to the Vista family of companies.”
“We look forward to partnering with Rick and the entire Mindbody team to deliver innovation to customers that will help grow their businesses and to consumers who depend on Mindbody to strengthen their health and well-being,” Sheth said.
This isn’t the first SLO-based business Vista Equity Partners has shown an interest in.
The firm acquired Shopatron, an online order management software company, in 2015. As part of the merger, Shopatron rebranded as Kibo. Roughly a year later, the company laid off local workers and consolidated in Dallas.
A spokesperson for Mindbody declined to comment on the Vista deal and whether the local company could see any changes on Monday, citing Securities and Exchange Commission regulations.
The company employs about 1,500 people around the world.
A FAQ included with the company’s press release Monday said it would be “business as usual” for Mindbody customers, with no changes to customer experience, partners or Mindbody pricing and contracts.
“Mindbody’s mission and vision remain unchanged, and we will continue to be dedicated to the success of our customers, helping people lead healthier, happier lives,” read the FAQ. “We believe that the resources, financial strength, and operational expertise of Vista will allow Mindbody to continue its growth strategy and enhance its leadership position throughout the fitness, beauty and wellness space.”
According to the FAQ, there are no planned management changes at this time.
The acquisition comes after Mindbody itself spent recent years buying up a slew of other businesses: This year alone it bought performance tracking company FitMetrix for $15.3 million in February, followed by New York City-based Booker Software for $150 million in March.
But the acquisitions have not come without added financial stress to the health and wellness software company.
At the end of 2017, the company seemed poised to turn a profit for the first time since going public in June 2015, but the cost of all those acquisitions pushed it further and further away from the black.
In its second quarter of 2018, the company’s net loss nearly quadrupled from the same quarter last year to $16.9 million, with representatives citing the Booker acquisition as the primary factor.
In it’s most recent financial report, the company’s reported net loss was $17.2 million in the third quarter of this year, compared with $3.6 million at the same time in 2017. Total revenue for the company grew to $63.8 million in the same quarter, a 37 percent increase year over year.
“Our recent acquisitions have introduced greater operational challenges than expected in the back half of the year,” Stollmeyer said in the financial report news release. “Yet we achieved multiple successes in Q3, are in a unique strategic position and are excited about our long-term growth opportunities.”
Additionally, in October, it was revealed that newly acquired FitMetrix had inadvertently exposed millions of user records to two unprotected servers.
Mindbody’s stock has fallen 49 percent over the last three months through Friday, according to MarketWatch.