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Why ConvergeOne Stock Skyrocketed Today

By Evan Niu, CFA – Nov 6, 2018 at 1:26PM

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The IT services provider is going private.

What happened

Shares of ConvergeOne (Nasdaq: CVON) have skyrocketed today, up by 32% as of 11:20 a.m. EST, after the company announced that it is selling itself in a go-private deal. Private equity fund CVC Capital Partners will acquire ConvergeOne in a transaction valued at $1.8 billion.

So what

The news comes just weeks after the IT services provider was rumored to be exploring a sale, and less than a year after ConvergeOne went public through a merger with Forum Merger. Shares started trading in February, and the company was controlled by Clearlake Capital. The deal values ConvergeOne at $12.50 per share, a 35% premium compared to the volume-weighted average price over the past 30 days. CVC will commence a tender offer, and the transaction is being funded with all cash.

Person writing Private Equity

Image source: Getty Images.

Clearlake Capital and company insiders collectively hold about 68% of all outstanding shares, which will be tendered in the offer.

Now what

In a statement, ConvergeOne CEO John McKenna said:

Today's announcement is a tremendous accomplishment for ConvergeOne and highlights the continued success of the Company. We are extremely proud of the ConvergeOne team, and we truly appreciate our phenomenal partnership with Clearlake and our other shareholders that has resulted in significant value creation. Our team is thrilled to partner with CVC to execute on the compelling growth opportunities in the rapidly evolving collaboration and technology services market.

The company expects the deal to close in the fourth quarter of 2018 or the first quarter of 2019.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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