EngageSmart stock jumps 12% on Vista Equity deal

EngageSmart Inc (NYSE: ESMT jumped more than 10% on Monday after Vista Equity Partners said it will buy the business-software company for $4.0 billion

Vista proposal values EngageSmart stock at $23

The private-equity firm valued each share of EngageSmart at $23 – about a 14% premium on their previous close.

EngageSmart expects this transaction to complete in the first quarter of 2024. Bob Bennett – its Chief Executive said today in a press release:

We believe the partnership with Vista and General Atlantic will enable us to continue investing in innovation and people to drive growth.

EngageSmart has been on the radar with its defensive business model, growing at >20%. The firm has shown strength in both SMB and enterprise sectors.

— Stocknewsgpt (@stocknewsgpt) October 23, 2023

The deal that will see affiliates of Vista Equity and General Atlantic own 65% and 35% of the Massachusetts-headquartered firm respectively is subject to customary closing conditions. EngageSmart stock has now gained 40% over the past two months.

EngageSmart is free to look for a better proposal

EngageSmart Inc can now take thirty days to “go shop” for a better, alternative proposal.

The tech software company is scheduled to report its quarterly financial results on November 2^nd. Consensus is for it to earn 4 cents a share – roughly unchanged versus last year.

EngageSmart intends to forgo the earnings call next month, though, now that it has received this all-cash proposal from Vista Equity Partners which is yet to secure regulatory and shareholders’ approval.

Vista will fund the acquisition with “fully committed equity financing”. Also on Monday, Stonepeak agreed to buy Textainer Group Holdings for $7.4 billion or $50 a share – close to a 50% premium on its previous close.