Fresh off reclaiming the top spot on CDN’s Top 100 Solution Providers list for 2012, Softchoice Corp. (TSX: SO) has announced its intention to become a privately held company.
On Monday evening, Softchoice announced it has entered into an agreement with Birch Hill Equity Partners of Toronto to take the solution provider private in a deal worth around US$412 million.
Birch Hill is offering US$20 for each issued and outstanding Softchoice common share, which would be a premium of 24 per cent over its Monday closing price, and 27 per cent over its 30-day average. The stock shot up quickly on news of the go-private offer, jumping nearly 20 per cent to reach C$20.06 in trading late Tuesday afternoon.
Softchoice’s board of directors is recommending that shareholders vote in favour of the deal.
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“Birch Hill is a very well respected private equity firm with an exceptional track record of investing in leading Canadian companies that have demonstrated strong future potential,” said Bill Linton, chairman of Softchoice’s board, in a statement. “The board of directors of Softchoice believes that this agreement is highly attractive to all stakeholders. It offers shareholders a substantial premium and a fully-funded all cash offer. It also provides management with the opportunity to continue the transformation of Softchoice’s business with the sponsorship of a highly regarded organization.”
Softchoice president and CEO Dave MacDonald told CDN in an interview that Birch Hill approached it with the offer, having watched the solution provider and being impressed by its growth.
“They thought we would be a good fit for their portfolio of companies,” said MacDonald, which includes Creation Technologies and Shred-it. “We evaluated (the offer) and decided it was a very good offer for our shareholders.”
MacDonald added that going private will allow Softchoice to accelerate its growth strategy, including its transformation into a services company, and make more investments in the services space that will pay longer-term dividends, investments that would be more difficult as a public company.
“Our customers will see even more intensity in our services and solutions offerings as we strive to be an even more relevant provider to them,” said MacDonald.
He said Birch Hill’s intention is not to “leverage out” Softchoice, as some equity companies have done in such deals, but rather grow Softchoice as a part of its larger portfolio. MacDonald said no layoffs are envisioned as part of the process.
The deal will be put to a special meeting of shareholders in June, where it will require a vote of two-thirds in favour for approval. It will also be subject to regulatory approval in Canada and the U.S. And should alternative bids emerge, Birch Hill has the right to match any offer.