The board of directors at software and computing services provider Blackbaud as expected turned down a $4.3 billion acquisition offer from Clearlake Capital Group. The offer, which Blackbaud received in mid-April, was the second made by the Santa Monica, California-based private equity firm.
Clearlake made a $71 per share bid for Charleston, South Carolina-based Blackbaud in late March — a deal that would have been valued at more than $4 billion. The most recently rejected offer established an $80 per share price.
“[T]he Blackbaud Board has unanimously concluded that Clearlake’s indication of interest significantly undervalues the company,” Blackbaud’s board members wrote in an email to Behdad Eghbali, co-founder and managing partner of Clearlake Capital Group regarding the most recent offer.
As The NonProfit Times reported this past April, financial services firm Baird indicated a per-share price in excess of $90 would not be unreasonable for Blackbaud.
Representatives from Clearlake Capital did not immediately respond to requests for comment. Clearlake’s portfolio of companies includes numerous holdings in the energy and industrials, food and consumer services and software and technology fields.
In mid-March, Blackbaud’s board of directors unanimously terminated the company’s stockholder rights plan. Such plans often set limits on the percentage of shares a given entity may own, or govern restrictive stock offerings, and are commonly referred to as “poison pills.” The stockholder rights plan had been scheduled to terminate in October of this year.
As of March 31, 2024, Clearlake Capital owned 18.89% of all outstanding shares, making it the largest Blackbaud institutional investor, according to Yahoo Finance. Insiders held 2.15% of shares. In early March of this year, Blackbaud announced plans to repurchase between 7% and 10% of its common stock throughout the remainder of 2024. Those plans marked an acceleration of a $500 million stock buyback announced in January.
“We believe our stock is undervalued and does not represent Blackbaud’s significant market opportunities. We are excited about Blackbaud’s long-term growth prospects and committed to enhancing shareholder value,” Blackbaud President, CEO and vice chairman of the board Mike Gianoni said at the time via a statement.
On Thursday, May 16, shares in Blackbaud closed at $78.52, down 49 cents from Wednesday’s closing price of $79.01. When Blackbaud rejected Clearlake Capital’s initial offer in March 2023, its stock had been trading in the mid-50s. It’s 52-week high is $88.56 per share and the low during the period is $64.32. The stock is down 9.4% year to date. Blackbaud trades on the NASDAQ exchange under the ticker symbol BLKB.
During Blackbaud’s Fiscal Year 2023, the company generated slightly more than $1.1 billion in total revenue and $44.7 million in income from operations for the year ending December 31, 2023. The company’s net income for the year was $1.8 million.
Aside from its interest in Blackbaud, in early May Clearlake, along with investment partner Francisco Partners, announced they would be acquiring the Software Integrity Group from Synopsys Inc., an electronic design automation company. That deal was valued at $2.1 billion, including up to $475 million in cash payable upon Francisco Partners and Clearlake achieving a specific rate of return. In March, Clearlake along with partner Insight Partners, completed a previously announced acquisition of artificial intelligence for enterprise analytics firm Alteryx, Inc. That transaction was valued at $4.4 billion, including debt.
