Activists' Wishes Granted: WebMethods To Be Sold To German Firm

Apr. 5.07 | About: Mediabistro Inc. (MBIS)

Now that’s what I call a shareholder-responsive company. Yesterday, the investment firm Oliver Press Partners filed a 13-D with the SEC disclosing a 6% stake in WebMethods (WEBM), asserting that the stock was undervalued, and that the firm might seek board representation and that it would seek talks with management on ways to enhance shareholder value, including potentially the sale of company.

So it shall be written, so it shall be done.

This morning, WebMethods announced a deal to sell the company to German software provider Software AG for $546 million, or $9.15 a share.

Weirdly enough, Citigroup’s John Reilly Walsh this morning had written a note on the Oliver Press filing, noting that the investment firm in November 2005 had taken a 6% stake in Matrix One, about four months before that company was acquired by Dassault Systems. “We believe pressure from Oliver Press Partners could be a catalyst to push WEBM’s management to more actively consider bids form potential acquirers,” he wrote, apparently unaware that in fact a deal was in the works.

In his note, Walsh had estimated the potential takeout price for the company at $8.50 to $12.50 a share; he listed Oracle (NYSE:ORCL), Hewlett-Packard (NYSE:HPQ), IBM (NYSE:IBM), SAP (NYSE:SAP), BEA (BEAS), Tibco (NASDAQ:TIBX), Cognos (COGN), Business Objects (BOBJ) and Progress Software (NASDAQ:PRGS) as potential buyers. He missed one.

WebMethods has long been showing up on lists of potential software industry takeover targets, as the enterprise software business continues to consolidate. (It showed up on a Bear Stearns list of possible targets last summer, for instance.)

WebMethods shares are trading above the bid price this morning, which suggests some investors believe that one (or more) of Walsh’s list of potential buyers might want to make a higher bid. WebMethods is up $1.92 to $9.20.

By the way, the Oliver Press investment group owns 3,394,790 shares bought at just under $7 a share; profit on their stake so far is close to $7.5 million.