What happened
Shares of Blackbaud (BLKB +4.99%) jumped Monday after the educational software company rejected a buyout offer from Clearlake Capital, which holds an 18.3% stake in it and is its largest shareholder.
The stock finished the session up 10.6% on the news.
NASDAQ: BLKB
Key Data Points
So what
In a press release Monday morning, Blackbaud said that it had received and rejected a takeover proposal from Clearlake Capital that valued the company at $71 a share.
That offer price represents a 23% premium from where the stock closed on Friday and is as high as the stock has been since early 2022.
However, Blackbaud's board of directors said in response that it "unanimously determined that the proposal is highly opportunistic and significantly undervalues Blackbaud." The board also seemed to believe that Clearlake was making the move to provoke a bidding war for Blackbaud in the hopes that other potential buyers would appear.
The board further asserted that the proposal ignores the "tangible momentum" in the business.
In 2022, revenue jumped 14% to $1.1 billion, and the company posted an adjusted operating profit of $202.6 million, showing that it's highly profitable after excluding expenses like stock-based compensation.
Its 2023 guidance calls for revenue growth in the low- to mid-single-digit percentages, with adjusted earnings per share in the $3.30 to $3.60 range, up from $2.69 in 2022, showing improving margins.
Now what
Monday's gains in the stock are more likely attributable to the offer rather than the rejection, but the offer itself indicates that Clearlake could come back to Blackbaud with a higher bid.
Clearlake, which describes itself as an investment firm focused on private equity and special situations, has not responded to Blackbaud's rejection, but given the size of its stake in the company, the firm is eager to make a gain.
Don't be surprised if Clearlake comes back with another offer for this education stock or pushes the company to put itself up for sale.
