Acquisition of Ebix, Inc. by an affiliate of Goldman, Sachs & Co. May Not Be in the Best Interests of Ebix Shareholders
Robbins Arroyo LLP is investigating the acquisition of Ebix, Inc. (NASDAQ: EBIX) by Goldman, Sachs & Co. On May 1, 2013, Ebix announced that it had entered into a definitive merger agreement whereby Ebix shareholders will receive $20.00 in cash for each share.
The Board of Directors’ Actions May Prevent Ebix Shareholders from Receiving Maximum Value for Their Stock
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Ebix is undertaking a fair process to obtain maximum value and adequately compensate its shareholders in the merger or whether they are seeking to benefit themselves.
The $20.00 merger consideration represents a premium of only 7.47% based on Ebix’s closing price on April 30, 2013, the last trading day prior to the merger announcement. The 7.4% premium is substantially below the median premium of 35.47% for comparable transactions over the past three years. Further, the $20.00 offer price is substantially below the target price of $25.00 set by an analyst at BOE Securities on September 13, 2012, and a target price of $24.00 set by an analyst at Craig-Hallum on March 13, 2013.
Is the Acquisition Best for Ebix and Its Shareholders?
On March 14, 2013, Ebix released its 2012 financial results reflecting record revenue growth. Specifically, Ebix reported fourth quarter revenue of $54.0 million an increase of 22.6% as compared to the same quarter 2011. Further, Ebix reported full year revenue increased to $199.4, an 18% increase over 2011. Moreover, earnings per share for the fourth quarter 2012 increased 9%, to $0.48 per share. In announcing these results, Robin Raina, Ebix’s Chairman, President, and CEO, stated, “The Company’s 2012 results reflect the strength of Ebix’s core business that helped us deliver outstanding results in one of the most challenging years for the insurance industry in a decade. Our revenue, operating cash flow, liquidity and diluted EPS were all at record levels as we look forward to continued high levels of performance in 2013.”
Given these facts, the firm is examining the board of directors’ decision to sell Ebix now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Ebix shareholders have the option to file a class action lawsuit against the company to secure the best possible price for shareholders and the disclosure of material information so shareholders can vote on the transaction in an informed manner.
Ebix shareholders who would like more information about their rights and potential remedies can complete the form below and we will contact you directly. You can also contact attorney Darnell R. Donahue at (800) 350-6003.