What happened
Shares of Coupa Software (COUP) were soaring 26.7% this week compared to where they closed last Friday, according to data from S&P Global Market Intelligence, after the business spending-management software specialist agreed to be bought out for $8 billion.
Coupa has been subject to merger rumors for weeks, but announced on Monday private equity firm Thoma Bravo would be taking it private in an all-cash deal at $81 per share, a 77% premium to its closing price on Nov. 22, the last full trading day before speculation of a possible sale began.
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So what
Coupa is a provider of software that helps companies track and manage their corporate spending, an especially useful skillset for an economy possibly heading toward a recession next year. It would make the company an attractive partner.
Several private equity firms were reportedly interested, but Coupa lead independent director Roger Siboni said in a statement that Thoma Bravo's "compelling and certain cash consideration in the transaction provides superior risk-adjusted value relative to the Company's stand-alone prospects."
The buyout also includes a significant minority investment from a wholly owned subsidiary of the Abu Dhabi Investment Authority.
Prior to the takeover rumors starting, Coupa's stock had lost more than three quarters of its value despite having enjoyed rising sales and bookings throughout the year. Coupa also reported third-quarter results the day after the merger announcement that showed an equally strong performance.
Revenue grew 17% to $217.3 million from $185.8 million and handily beat Wall Street forecasts of $212 million. Coupa also narrowed net losses to $85 million from $91 million, under generally accepted accounting principles (GAAP), while on an adjusted basis it had profits of $11.6 million, or $0.15 per share. Although that was down sharply from the $0.31 per share earned in the year ago period, it was well ahead of analyst forecasts of $0.27 per share.
Now what
The deal is expected to close in the first half of 2023, assuming Coupa Software's shareholders approve the deal and the software stock gets the necessary regulatory approvals.