What happened

Shares of Monotype Imaging Holdings (NASDAQ:TYPE) popped more than 20% on Friday after the font and image technology company announced that it would be acquired. 

So what

Private equity firm HGGC will acquire all outstanding shares of Monotype stock for $825 million in cash. The per-share acquisition price of $19.85 represents a premium of approximately 23% to Monotype's closing price on July 25, the last day before news of the deal broke.

The transaction was approved by Monotype's board of directors and is expected to close in the fourth quarter. "We are pleased to reach this agreement with HGGC, which enables our shareholders to realize immediate value at a significant premium for their shares," Monotype Chairman Pamela Lenehan said in a press release.

Two people shaking hands

Monotype agreed to be acquired by private equity firm HGGC. Image source: Getty Images.

CEO Scott Landers indicated that being free from the requirements of a public company would allow Monotype to take a longer-term approach to its investment strategy. "As a private company, we will have the financial support and added flexibility to invest in ways that deliver more value and improve the overall experience for our customers," Landers said.

Now what

The agreement gives Monotype's board of directors a 30-day period to solicit and evaluate other acquisition offers. Monotype has the right to terminate the merger with HGGC if it finds a better deal.

After Friday's gains, Monotype's stock was trading slightly above the deal's acquisition price at about $20 per share, suggesting that at least some investors believe a competing bid may materialize.

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