Blue Prism defends £1.1bn Vista deal amid opposition

Blue Prism Group, the Warrington-based robotic process automation (RPA) software firm, has defended its agreed deal to be taken over by US private equity firm Vista Equity for about £1.1 billion days after activist hedge fund Coast Capital LLC, which owns a small stake in Blue Prism, opposed the deal.

Coast Capital’s opposition followed news that Hawk Ridge Capital Management, another shareholder in Blue Prism, said it wasn’t happy with the price on offer.

In a stock exchange statement on Wednesday, Blue Prism said: “The board’s decision to recommend the Vista offer reflects its belief that the Vista offer provides greater value and less risk than Blue Prism’s current standalone prospects and potential standalone alternatives.

“While Coast indicates that it has ‘communicated the operational improvement plan developed with sector experts and prior management team members over several months’, it has not yet provided the company with a detailed plan, including the financing of any such plan, capable of assessment by Blue Prism’s board …

“The Blue Prism board has determined that the acquisition is in the best interests of Blue Prism shareholders, immediately delivering certain value without the execution risks associated with the necessary strategic investments envisaged.

“The board appreciates the constructive feedback it has received from Blue Prism shareholders and looks forward to further engagement with investors in the coming weeks.”

In a letter to the software firm’s board, Coast Capital said it would encourage other shareholders to reject Vista’s £11.25 per share cash offer, saying the bid undervalues Blue Prism.

“The proposed transaction leads shareholders to question the board’s clear conflict of interest in unanimously supporting a transaction which values the company materially below consensus valuation, 52-week high, and its average price since IPO,” said Coast Capital, which owns about three million Blue Prism shares.

Blue Prism shares are trading around £11.41.

On September 28, Blue Prism, whose customers include the NHS, Daimler, Fidelity and eBay, said it plans to recommend that shareholders vote in favour of the £11.25p per share cash bid, calling the terms “fair and reasonable.”

If the deal for Blue Prism goes through, Vista said it intends to “indirectly transfer” the business to TIBCO, a Vista portfolio company.

On its plans for the combined TIBCO and Blue Prism, Vista said: “Vista, like all private equity investors, will always assess options for its investments and intends to explore the potential sale of all or a portion of its equity interest in the combined group which may happen within the next 12 months.”

On Wednesday, Blue Prism added: “The board is not subject to any conflicts relating to Vista, TIBCO or the Vista Offer …

“… the company’s executive team has not had any discussions or entered into any agreements with Vista or TIBCO regarding ongoing participation in the management of the company or future incentivization arrangements.”