Symphony Technology Group will acquire MSC.Software for $360 million, a value that some of the company’s investors believe is too low.
Under the terms of the deal, MSC shareholders will receive $7.63 in cash for each share of Nasdaq-listed MSC common stock. The price per share represents a 13 percent premium over Tuesday’s closing trading price.
“After a careful and thorough review of all strategic alternatives available to MSC, the MSC board of directors has approved this agreement as it represents the best option for our stockholders,” Ash Munshi, interim chief executive officer of MSC, said in a statement.
MSC stockholders need to approve the deal. Shareholders representing 14 percent of the outstanding shares of MSC, including the company’s largest shareholder Elliott Associates, have agreed to vote in favour of the deal. Elliott Associates, a private equity group with $14 billion of assets under management, has also agreed to provide debt and equity to help finance the transaction, MSC said.
Law firm Levi & Korsinsky has been hired to investigate MSC's board of directors for “possible breaches of fiduciary duty and other violations of state law in connection with their attempt to sell the company to Symphony Technology”, the firm said in a statement.
The potential breaches arise from the fact that MSC’s shares traded at $7.73 as recently as 1 June, and more than $10.70 in the fourth quarter of 2008, the law firm said. The company has more than $149 million in cash with no debt and a book value in excess of $7 per share, Levi & Korsinsky said. Also, analysts set a median price target for MSC stock at $8.75 per share with a high target of $10 per share, the firm said.
Symphony Technology Group invests in software and services companies. The firm’s portfolio consists of nine companies with combined revenues of $2.5 billion.