European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Vista/Blue Prism: “Increased and Final” Offer Amidst Potential Bid Contest

Event-Driven

On 28 September, Vista Equity Partners Management, LLC reached an agreement to acquire <a href="https://www.smartkarma.com/entities/blue-prism-group-plc" target="_blank" data-smartkarma-citation="entities:23475:1" rel="noopener">Blue Prism (PRSM LN)</a> Group plc for £1.1 bn, to be effected by a scheme of arrangement.
Consideration is 1,125p/share, in cash, cum dividend. For an implied equity value of £1,090 mn (£1,095 as reported), and an implied EV of c. £966.5 mn. It represents 5.2x EV/ Fwd Revenue, and 59% of the LTM high share price. Vista has received irrevocable undertakings and letters of intent in respect of 22,261,402 shares (23%).
Vista intends to expand Blue Prism's enterprise software offering and strengthen its exposure to the robotic process automation sector. Vista intends to merge Blue Prism with TIBCO, a company in Vista's portfolio, to yield synergies and market differentiation, combining the go to market strategy and the product and R&amp;D budgets. The merged company will provide customers with access to a complementary set of hyperautomation capabilities.
Synergies would come from systems and infrastructure, SG&amp;A (facilities, contracts and shared services) and headcount reductions of 8 to 10% of the c. 4,750 employees of the merged group; in aggregate cost savings should approximately total 15% of the combined Group. Vista intends to explore the potential sale of all or a portion of its equity interest in the combined group which may happen within the next 12 months.
From my calculations, synergies could be worth at least 151p/share (15% of SG&amp;A of Blue Prism, capitalized minus cost of synergies).
EV/Fwd sales comparables median implied valuation is 1,521p/share, still 20% less than where the shares were trading last January. For comparison, median Capital IQ consensus TP is 1,375p. Underperformance is due to investor concern over continued losses and Covid delays to sales. Mr Kingdon (CEO) warned earlier this year that the market is drastically undervaluing the company and hinted it was considering a shift to New York. 
Gross spread is -2.2%, with strong volumes traded since the agreement was announced. The market believes there will be a sweetened offer. Long PRSM.
Coast Capital believes Blue Prism is currently undervalued, warned the Board not to sell and said the business is still worth far more than its share price suggests. Coast urged not to “throw in the towel”.

On 28 September, Vista Equity Partners Management, LLC reached an agreement to acquire Blue Prism (PRSM LN) Group plc for £1.1 bn, to be effected by a scheme of arrangement.
Consideration is 1,125p/share, in cash, cum dividend. For an implied equity value of £1,090 mn (£1,095 as reported), and an implied EV of c. £966.5 mn. It represents 5.2x EV/ Fwd Revenue, and 59% of the LTM high share price. Vista has received irrevocable undertakings and letters of intent in respect of 22,261,402 shares (23%).
Vista intends to expand Blue Prism's enterprise software offering and strengthen its exposure to the robotic process automation sector. Vista intends to merge Blue Prism with TIBCO, a company in Vista's portfolio, to yield synergies and market differentiation, combining the go to market strategy and the product and R&amp;D budgets. The merged company will provide customers with access to a complementary set of hyperautomation capabilities.
Synergies would come from systems and infrastructure, SG&amp;A (facilities, contracts and shared services) and headcount reductions of 8 to 10% of the c. 4,750 employees of the merged group; in aggregate cost savings should approximately total 15% of the combined Group. Vista intends to explore the potential sale of all or a portion of its equity interest in the combined group which may happen within the next 12 months.
From my calculations, synergies could be worth at least 151p/share (15% of SG&amp;A of Blue Prism, capitalized minus cost of synergies).
EV/Fwd sales comparables median implied valuation is 1,521p/share, still 20% less than where the shares were trading last January. For comparison, median Capital IQ consensus TP is 1,375p. Underperformance is due to investor concern over continued losses and Covid delays to sales. Mr Kingdon (CEO) warned earlier this year that the market is drastically undervaluing the company and hinted it was considering a shift to New York. 
Gross spread is -2.2%, with strong volumes traded since the agreement was announced. The market believes there will be a sweetened offer. Long PRSM.
Coast Capital believes Blue Prism is currently undervalued, warned the Board not to sell and said the business is still worth far more than its share price suggests. Coast urged not to “throw in the towel”.

Vista/Blue Prism Group: Agreed Lowball Offer