Just over seven months after it hired Needham & Company to look into potential strategic alternatives for the company, satellite communication services provider Globecomm Systems is to be acquired by private equity firm Wasserstein & Co for…
Just over seven months after it hired Needham & Company to look into potential strategic alternatives for the company, satellite communication services provider Globecomm Systems is to be acquired by private equity firm Wasserstein & Co for approximately US$340m.
The two parties have entered into a definitive agreement in which an affiliate of Wasserstein is offering Globecomm shareholders US$14.15 per share in cash.
The purchase price represents a premium of 21.9% over the closing price on 14 January 2013, the day Nasdaq-listed Globecomm announced that it had hired Needham to conduct its strategic review.
The offer price also corresponds to a valuation multiple of 8.85 times Globecomm’s fiscal 2013 adjusted EBITDA (US$38.4m).
The transaction was unanimously approved by Globecomm’s board of directors and is expected to be completed in the fourth calendar quarter of 2013. The merger is subject to Globecomm stockholder approval as well as antitrust clearance and other governmental approvals.
Wasserstein will finance the buyout through cash provided by itself and other unnamed co-investors, as well as a debt facility from Highbridge Principal Strategies, a private equity and credit investment fund owned by JP Morgan.
In a letter to Globecomm employees, chairman and CEO David Hershberg said: “We believe Wasserstein & Co. is an excellent partner for Globecomm, and that they will aid us in our growth endeavours. At the same time, we will be able to maintain flexibility and independence to continue to serve our government, maritime and commercial customers with the industry-leading communications solutions that they expect from Globecomm. Our headquarters will remain in Hauppauge (New York).
“We are very excited about this transaction, and believe it will provide considerable opportunities and benefits to the company, our customers, and hence our employees. We expect no changes or interruptions in fulfilling our obligations to our customers as a result of this transaction.”
Needham & Co is exclusive financial adviser to Globecomm with Kramer Levin Naftalis & Frankel its legal counsel. Jones Day provided legal advice to Wasserstein, while U.S. Space advised it on industry matters.
Shareholder pressure final tells
The sale of Globecomm has been a long time in the making and is a triumph for some of its more activist shareholders.
Back in 2011, Hershberg told SatelliteFinance that his group had already received unsolicited takeover offers from “a couple of people.”
This had not gone unnoticed by certain of the company’s shareholders, which made several requests to management in 2012 to put the company up for sale.
The pressure finally told and at the start of 2013 Globecomm retained Needham to ‘act as its financial adviser to review potential strategic alternatives to enhance shareholder value’.
At present, ten institutional investors own a majority 55.66% of Globecomm. Of those, the largest shareholder is Boston-based Wellington Management which owns 10.54% having recently upped its stake by a further 1% in August.
In contrast, since the beginning of the year the previous largest shareholder, New York-based financial investment advisory firm NSB Advisors, has reduced its holding from 19% down to 3.27%.
Whether these shareholders are getting the deal they want is another matter. Some analysts have argued that Wasserstein’s US$14.15 per share offer is substantially below estimates, with most analysts setting a target price of over US$15.5 per share and some as high as US$18.00.
Indeed, the market reaction to the deal saw Globecomm’s share price fall from US$14.40 at close on 23 August to US$13.96 on 26 August, the day the definitive takeover agreement was announced.
