Shareholders of Kitchener-Waterloo’s Magnet Forensics have voted in favour of the cybersecurity company’s proposed sale to American private equity firm Thoma Bravo for $1.8 billion CAD.
As first reported by The Globe and Mail and confirmed to BetaKit by a Magnet spokesperson, the digital investigation software firm has received all of the votes necessary for the deal to proceed at a March 23 special meeting of shareholders. The full results of the vote were not immediately available.
With the successful vote, efforts to rally support against the acquisition by one of Magnet’s largest shareholders appear to have fallen short.
A Magnet spokesperson confirmed to BetaKit that the company has received all of the votes necessary for the deal to proceed.
Silicon Valley hedge fund Nellore Capital, which holds 11 percent of Magnet’s subordinate voting shares, has publicly opposed the takeover on the grounds that its current price tag undervalues Magnet. At least three other undisclosed North American investment managers also planned to vote no on the deal, according to a previous report from The Globe. Meanwhile, reports on the deal from different proxy advisors offered conflicting advice.
Nellore founder Sakya Duvvuru told BetaKit that the firm is “disappointed” by the results. Despite this vote in favour of the acquisition, Duvvuru confirmed to BetaKit that the firm’s campaign against the deal is not over, noting, “this is not the end of the road for us.” According to Duvvuru, Nellore submitted a notice of dissent this week to Magnet, and plans to take the company to court to determine the fair value of its shares.
As part of the takeover, Thoma Bravo has agreed to pay $44.25 per share to holders of Magnet’s subordinate voting stock, a more than 15 percent premium to Magnet’s January 19 closing price. Magnet co-founders, CEO Adam Belsher and CTO Jad Saliba, and chairman Jim Balsillie (former BlackBerry chair and co-CEO) are set to receive $39 per share for their stakes in Magnet, but will roll over most of their shares into stock in the acquired company.
In order to proceed, the deal required two-thirds support from all shareholders, and for the majority of subordinate voting shareholders to vote yes.
RELATED: Fight brews over Magnet Forensics’ proposed $1.8 billion acquisition by Thoma Bravo
Ultimately, ninety-nine percent of all votes cast across both shareholder classes were in favour of the deal. This should not be surprising given that Belsher, Saliba, and Balsillie currently own all multiple voting shares and more than 95 percent voting control of the company. Meanwhile, Magnet confirmed that nearly 67 percent of votes cast by owners of subordinate voting shares came down in support of the acquisition.
The takeover still requires further regulatory approvals in Canada, the United States, and the United Kingdom, as well as a go-ahead from the Ontario Superior Court of Justice. Pending that, the deal is expected to close in April 2023.
Founded in 2009, Magnet develops software that acquires, analyzes, and shares evidence from a variety of devices. The company caters to thousands of law enforcement, government, military, and corporate organizations around the world.
UPDATE (03/24/23): This story has been updated to note additional information shared by Magnet Forensics.
Feature image courtesy Magnet Forensics.