Despite vote, dissenting shareholder says “this is not the end of the road for us.”
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.
In January, Thoma Bravo struck a deal to buy TSX-listed Magnet and take it private. Following the close of the deal, Thoma Bravo intends to combine Magnet with fellow digital forensics firm Grayshift, a United States-based company that Thoma Bravo acquired majority control of in July 2022.
In order to proceed, the takeover required two-thirds support from all shareholders, and for the majority of subordinate voting shareholders to vote yes. Per The Globe, 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.
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.
Feature image courtesy Magnet Forensics.
