Update: TIBCO Software Agrees To Be Taken Private By Vista Equity Partners

Summary

• Shares of TIBCO Software surged Monday on news that the company would be acquired by Vista Equity Partners.
• The agreed upon deal price values each share of TIBCO's common stock at $24.00.
• Many law firms are currently examining the offer price and investigating whether TIBCO's board members violated their fiduciary duty towards shareholders.

At 7:30 Monday morning, marketwired stated in a press release that TIBCO Software (TIBX) has agreed to be acquired by private equity firm Vista Equity Partners. The deal is valued at $4.3 billion dollars, and values each share of common stock at $24.00. The all cash deal was approved unanimously by TIBCO's board members, and is scheduled to close some time in the fourth quarter.

CEO Vivek Ranadive had this to say about the deal:

"The sale of TIBCO to Vista will provide shareholders with immediate and substantial cash value, as well as a compelling premium, and the board has unanimously agreed that this transaction is in the best interest of all our shareholders."

Vista's offer price represents a 26.3% premium to Friday's closing price of $19.51. However, over the previous year, shares traded as high as $26.90, meaning the deal price is well below the company's fifty-two week high. It is also worth noting that, in 2011, Hewlett Packard (HPQ) was contemplating making a bid for TIBCO that valued each share of the company's common stock in the high $30s. This equated to a valuation of over $6 billion.

While a lot has changed over the last few years in terms of operational performance, the recent deal may not be enough to woo shareholders. To this point, many law firms have launched investigations regarding the sale. They include:

• Tripp Levy, PLLC
• Andrews & Springer, LLC
• Johnson & Weaver, LLP
• Newman Ferrara LLP
• Powers Taylor LLP
• The Briscoe Law Firm, PLLC
• The Law Office of James C. Kelly
• Levi & Korsinsky
• Brower Piven
• Rosen Law Firm, P.A.

All of the above law firms are investigating TIBCO's board members regarding a breach of their fiduciary duty to act in the best interest of TIBCO's shareholders. In each of the press releases, the firms announced that they were reviewing whether or not the unanimously agreed upon share price of $24 represents a fair value for the company's common stock.

Conclusion

In my original article Tibco Software: Now Is The Time To Speculate, I advised investors to buy this stock as a takeover candidate. My thesis that TIBCO would be taken over did turn out to be correct. However, I must admit that my original presumption of Hewlett Packard being the most likely buyer for the company was incorrect. With that being said, I am now advising investors to hold the stock as the aforementioned investigations of TIBCO's board members take place. These investigations may lead to a better offer price from Vista or another private equity firm.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.