Shares of EngageSmart, the business-software company, surged by 12% to reach $22.61 in premarket trading on Monday. The jump came after the announcement that it is set to be purchased by an affiliate of Vista Equity Partners in an all-cash transaction worth $4 billion, equivalent to $23 per share.
According to sources familiar with the matter as reported by The Wall Street Journal, the deal represents a 23% premium over EngageSmart’s unaffected closing stock price on October 4. The stock closed at $20.20 last Friday.
Upon the completion of this acquisition, Vista affiliates will hold 65% of the outstanding equity, while General Atlantic affiliates will hold the remaining 35%. Currently, investment firm General Atlantic controls EngageSmart.
Despite the ongoing trend of private-equity firms staying out of major deals, this agreement stands out due to its significant size. It is expected to be finalized in the first quarter of 2024.
Following the merger, EngageSmart will transition into a privately held company, with its common stock no longer listed on any public market.
The agreement also includes a 30-day “go-shop” period that allows the company to entertain alternative acquisition proposals. This period is set to expire on November 22.