The move would appear to be motivated more by freedom of movement than a need for cash. Blue Coat has cash, said a company insider. By becoming a private company, it can invest that money on longer term development projects without a negative impact on quarterly results. It can plan for the future without worrying too much about shareholders’ immediate reactions.
Under the agreement, current shareholders will receive $25.81 in cash for each share of Blue Coat common stock held. This represents a premium of just under 50% over Blue Coat’s closing price on the previous day, and approximately 62% over the previous 60-day average. It is, however, well down on the early highs of January this year, and coupled with the departure of its chief executive, Michael Borman during the summer it could indicate problems within the company.
Thoma Bravo, with offices in Chicago and San Francisco, is a leading private investment company with an existing strong software and security portfolio. Other security investments include Embarcadero Technologies, Entrust, LANDesk Software, SonicWALL, and Tripwire. Its investment strategy involves identifying and understanding industry sectors that are fragmented and then consolidating them by acquiring and integrating similar businesses. It is not yet known whether Thoma Bravo intends to move Blue Coat closer to other security companies such as SonicWALL and Tripwire; but its other options include acquiring and integrating new businesses, or concentrating on the organic growth of Blue Coat with new product development.
“As a private company, Blue Coat will be better positioned to innovate at an accelerated rate and achieve a higher level of growth,” commented Orlando Bravo, the managing partner at Thoma Bravo. The transaction is expected to complete during the first quarter of 2012.