Robbins Arroyo LLP: Acquisition of SciQuest Incorporated (SQI) by Accel-KKR Company LLC (Private) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of SciQuest Inc. (NASDAQ: SQI) by Accel-KKR Co. LLC (Private). On May 31, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Accel-KKR will acquire SciQuest. Under the terms of the agreement, SciQuest shareholders will receive $17.75 in cash for each share of SciQuest common stock.
Is the Proposed Acquisition Best for SciQuest and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at SciQuest is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $17.75 merger consideration represents a premium of only 33.3% based on SciQuest’s one-month average closing price. This premium is significantly below the average one-month premium of nearly 51.3% for comparable transactions within the past three years. Further, the $17.75 merger consideration is significantly below the target price of $21.00 set by an analyst at JMP Securities on February 5, 2016. In the last three years, SciQuest traded as high as $32.69 on March 18, 2014, and most recently traded above the merger consideration – at $17.79 – on March 24, 2015.
On April 28, 2016, SciQuest reported strong earnings results for its first quarter 2016. Revenues for the quarter were $26.9 million, an increase of 3.9% compared to the same period last year. Net income for the quarter was $1.1 million, an increase of 466% compared to the same period last year. Additionally, SciQuest has beat consensus analyst estimates for adjusted EPS in every quarter for the past two years, adjusted net income in every quarter for the past year, and revenue in three out of the past four quarters. In commenting on these results, SciQuest Chief Executive Officer Stephen Wiehe remarked, “First quarter financial results were at or above the high end of the guidance ranges for the third quarter in a row. We continued to generate high average selling prices to new customers in addition to healthy cross-selling to existing customers. On the operations front, we enhanced our go-to-market strategy to enhance recurring revenue retention rates, and we completed the development work associated with our latest software update that we released earlier this month. Looking forward, we are on-track to achieve all of our previously communicated goals for the year and beyond, including those related to growing revenue and increasing our already healthy profitability.”
In light of these facts, Robbins Arroyo LLP is examining SciQuest’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.
SciQuest 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.
SciQuest 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.