Acquisition of Informatica Corporation (INFA) by the Canada Pension Plan Investment Board and Permira Holdings Ltd. May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP are investigating the proposed acquisition of Informatica Corporation (NASDAQ: INFA) by the Canada Pension Plan Investment Board and Permira Holdings Ltd. On April 7, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Canada Pension Plan and Permira will acquire Informatica. Under the terms of the agreement, Informatica shareholders will receive $48.75 in cash for each share of Informatica common stock.
Is the Proposed Acquisition Best for Informatica and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Informatica is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $48.75 merger consideration represents a premium of only 6.4% based on Informatica’s closing price on April 6, 2015. This premium is significantly below the average one-day premium of nearly 24% for comparable transactions within the past 5 years. Further, the $48.75 merger consideration is below the target price of $50.00 set by multiple analysts, including an analyst at FBN Securities on January 31, 2015, an analyst at First Analysis Corp. on February 2, 2015, and an analyst at Stifel on February 5, 2015.
On January 27, 2015, Informatica reported strong earnings results for its fourth quarter 2014. Specifically, Informatica reported total revenues for the fourth quarter of 2014 of $303.7 million, an increase of 10% from $276.0 million in the fourth quarter of 2013. Informatica also reported record quarterly software revenues of $150.2 million, up 12% year-over-year, and record quarterly GAAP earnings per diluted share of $0.40, compared to $0.36 the previous year. GAAP net income for the fourth quarter was $43.6 million, up 9% from $39.9 million in the fourth quarter of 2013. Additionally, Informatica has beat consensus analyst estimates for adjusted EPS and in every quarter for the past year, and adjusted net income in three of its last four quarters.
In commenting on these results, Informatica Chairman and Chief Executive Officer Sohaib Abbasi remarked, “Our record quarterly software and total revenues in the fourth quarter reflect improved execution and growing customer adoption of our products. To attain higher long-term growth, we are making good progress in delivering innovative products and in scaling go-to-market resources to pursue four distinct billion dollar market opportunities: cloud integration, MDM, data integration for next generation analytics and data security.”
In light of these facts, Robbins Arroyo LLP is examining Informatica’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Informatica shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Informatica shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.