Nasdaq-listed software firm SS&C Technologies has again trumped Vista’s offer in the battle for Britain’s robotic process automation firm Blue Prism (PRSM:AIM), just a day before it would have been forced to walk away. And it may have landed the knockout blow.
SS&C has made a firm offer of £12.75 per share in cash to Blue Prism shareholders, a bid that values the Warrington-based company at £1.24 billion, trumping Vista’s ‘final’ £1.22 billion offer. Blue Prism’s board immediately withdrew its recommendation for the Vista offer and threw its support behind SS&C’s new higher deal.
To recap, on 26 November 2021 private equity firm made what it called its ‘final’ offer for Warrington-based Blue Prism with a £12.50 per share cash deal, continuing a buyout battle for Blue Prism that started in September when the private equity fund tabled an opening £11.25 per share bid.
As Shares noted last week, the possibility of a takeover was one of the chief reasons why we originally flagged Blue Prism as an investment opportunity in July 2021 at 778.5p.
LEVERAGE LEVERS PULLED
SS&C’s new offer comes as no surprise to Shares. The lack of operational and cost synergies can leave private equity buyers hamstrung and give the advantage to a trade buyer, a point we have previously made. This seems to be an edge that SS&C has used to its advantage - SS&C is a provider of financial services solutions, an industry where Blue Prism earns a large chunk of its revenue.
‘Our take on the combination with SS&C is that, on the one hand, it narrows the target market largely to SS&C’s financial services and healthcare customer base but, at the same time, it could provide a focus niche where it can develop a perhaps needed competitive advantage when up against larger peers,’ said Megabuyte’s Lee Prout.
The SS&C deal would seem to be the end of Vista’s interest (although that is yet to be confirmed) but investors are still clinging to hopes that another potential buyer could emerge, illustrated by Blue Prism’s share price rising nearly 2% today to £13.22, almost 4% above SS&C’s £12.75 per share offer.
Blue Prism’s stark discount to rivals is why. SS&C’s offer implies an enterprise value of around £1.12 billion for Blue Prism, putting the UK firm on a forward EV/sales multiple of 6.2-times.
Close peer UiPath is currently being valued in the US at 23-times forward EV/sales, albeit much larger, according to Megabuyte’s Prout.
