In new documents filed with the U.S. Securities and Exchange Commission, Mindbody representatives said the pending $1.9 billion acquisition deal with Vista Equity Partners is “highly attractive” to shareholders.
The filing comes soon after a lawsuit was filed by shareholder Joseph Schmit in San Luis Obispo County Superior Court on Jan. 24, claiming that Mindbody’s board of directors and executives stood to benefit the most from the deal, and failed to consider the interests of smaller shareholders.
The San Luis Obispo-based health and wellness software company is in the middle of a massive acquisition deal with the San Francisco-based private equity firm, Vista Equity Partners, that will take the previously public tech company private again, and net top executives millions of dollars.
Mindbody representatives have declined to comment on the deal itself, as well as the lawsuit, but in the documents filed on Jan. 31, Mindbody calls its deal with Vista fair to its shareholders, and “the result of a rigorous and fulsome transaction process.”
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For a refresher, Vista has proposed paying $36.50 for every share of common stock — a 68 percent premium to shares’ closing price Dec. 21.
Schmit’s lawsuit claimed that price was too low. Market estimates place the potential value of Mindbody shares much higher, he said.
In the SEC documents, Mindbody said that $36.50 was the amount agreed upon after denying Vista’s original asking price.
“After receiving Vista’s initial $35.00 per share offer, Mindbody’s board directed its advisers to push Vista on price, which resulted in Vista increasing its price to $36.50,” read the document filed with the SEC. “Vista firmly indicated that this was the highest price it would offer.”
The company noted that the agreed-upon per-share amount is the second highest one-day premium ever paid for a public software company.
For example, LinkedIn’s $26.2 billion acquisition deal with Microsoft in 2016 had Microsoft paying only a 50 percent premium on LinkedIn shares, or $196 a share.
Vista’s acquisition of meeting, hospitality and event software provider Cvent had the highest premium paid for a software company, with Vista paying 69 percent more than the stock’s pre-deal closing price — or $36 per share.
In a quote included in Mindbody’s SEC filing, financial analyst company J.P. Morgan described the deal as “an early Christmas present” to shareholders.
“Mindbody will be acquired by Vista Equity Partners at a time when the company is going through an operational transition post the acquisition of Booker, and we see this deal as a win-win,” the quote read. “From the shareholder standpoint, we do not believe (Mindbody) would see a significant turn in fundamentals until September 2019, so the 68 percent premium to Friday’s close is a win for shareholders.”
Financial analyst companies Credit Suisse and Morgan Stanley both also said the deal appeared fair to shareholders in quotes included in Mindbody’s latest SEC filing.
The company additionally contacted 51 other parties, both prior to signing the merger agreement and after during the “go-shop” period, to see if there were any other proposals.
No other parties submitted an alternative proposal, Mindbody says.
The Mindbody acquisition deal is still pending. Shareholders are expected to meet and vote on the proposal Feb. 14, and if successful, it is expected to close sometime in the first quarter of 2019.