Is TIBCO's Buyout Fairly Valued?

TIBCO Software Inc. (NASDAQ: TIBX) announced Monday before the markets opened that private equity firm Vista Equity Partners would be taking it private. The agreed upon buyout was $24 per share, which would total up to $4.3 billion. J.P. Morgan and Jefferies will be providing the debt financing to Vista.

Earlier this month, TIBCO had announced that it was considering strategic and financial alternatives for the company. The sale now confirms rumors that TIBCO was looking for a buyout among private equity investors. If the merger goes through, it will mark more than a decade that some investors have considered TIBCO as a buyout candidate.

In terms of the shareholders, David West, a member of TIBCO’s board, said: “Ultimately, the board concluded that the sale alternative was the best alternative, and that Vista’s offer to acquire TIBCO is the best way to maximize value for our shareholders.”

However, this statement is slightly controversial because at least two law firms have entered the ring to investigate if the shareholders will have received adequate consideration for their shares. Andrews & Springer and Newman Ferrara have issued investigation press releases. With a 52-week trading high of $26.90, the question remains whether shareholders are being adequately considered and given an appropriate value for their shares.

Considering this, 24/7 Wall St asks if TIBCO shares are fairly valued.

In the first couple hours after the market opened Monday, the share price had risen as high as $23.70, not quite to the $24 mark but a notable gain of 21.5%. TIBCO’s average volume for a day of trading is roughly 3 million shares. As many as 40 million shares have traded as of the first two hours in Monday’s trading session.

TIBCO’s stock has a consensus price target of $19.46, and it has a 52-week trading range of $18.20 to $26.90. The company has a market cap of $3.86 billion.

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