Santa Clara, Calif.-based cyber-security and network control company Infoblox Inc. (NYSE: BLOX) said it agreed to be acquired by private equity firm Vista Equity Partners for $26.50 per share in cash, at a $1.6 billion implied valuation.
Less than three weeks ago, ExitHub reported that Infoblox hired Morgan Stanley to explore a sale under pressure by activist investor Starboard Value LP, which disclosed a stake of about 7% in the company.
Vista’s purchase price represents a 33% premium to Infoblox’s average closing share price over the last 60 trading days, and a 73% premium to Infoblox’s unaffected closing price as of May 11, 2016, when media reports of interest in acquiring Infoblox were first published.
Infoblox delivers actionable network intelligence to enterprise, government, and service provider customers around the world. As the industry leader in DNS, DHCP, and IP address management, the category known as DDI, Infoblox provides control and security from the core—empowering thousands of organizations to increase efficiency and visibility, reduce risk, and improve customer experience.
“We had a strong finish to fiscal 2016,” said Jesper Andersen, president and chief executive of Infoblox at the end of August. “Fourth quarter revenue grew 5% sequentially, and we achieved record fiscal 2016 revenue.”
“We are excited to begin our partnership with Vista and look forward to leveraging their operational insights,” he said today.
The company reported total net revenue of $86 million for the fourth quarter of fiscal 2016. Total net revenue for fiscal 2016 was a record $358 million, an increase of 17% compared with the total net revenue of $306 million in fiscal 2015.
On a GAAP basis, the company reported a net loss of $10 million, or $0.18 net loss per diluted share, for the fourth quarter of fiscal 2016, compared with a net loss of $5 million, or $0.08 net loss per diluted share, for the fourth quarter of fiscal 2015. For fiscal 2016, the company reported a GAAP basis net loss of $14 million, or $0.24 net loss per diluted share, compared with a net loss of $27 million, or $0.48 net loss per diluted share, in fiscal 2015.
“Infoblox is the trusted market leader in DDI solutions, and their strategy and portfolio of secure automated networking solutions make the company uniquely positioned to deliver for its customers,” said Brian Sheth, co-founder and president of Vista Equity Partners.
The deal was unanimously approved by the company’s board of directors, and is expected to close in Infoblox’s fiscal second quarter, subject to customary closing conditions, including shareholders’ and regulatory approvals. Infoblox will maintain its corporate headquarters in Santa Clara, and continue to be led by its current executive team.
Morgan Stanley is acting as exclusive financial advisor and Fenwick & West LLP is acting as legal advisor to Infoblox. Vista’s legal advisor is Kirkland & Ellis LLP.
Vista Equity Partners, with offices in Austin, Chicago and San Francisco, has more than $26 billion in cumulative capital commitments. The firm currently invests in software, data and technology-based companies.
Starboard Value LP is a New York-based investment adviser and activist hedge fund with a focused and fundamental approach to investing in publicly traded U.S. companies. Starboard invests in what it refers to as “deeply undervalued companies and actively engages with management teams and boards of directors to identify and execute on opportunities to unlock value for the benefit of all shareholders.”
A week ago, drugmaker Perrigo Co Plc (NYSE/TASE: PRGO) became Smith’s next target, as Starboard disclosed a 4.6% stake in the company, which last year rejected rival Mylan NV’s (NASDAQ: MYL) $26 billion hostile takeover bid.
As of March 31, 2016, Starboard Value held 22 institutional investment positions with a total market value of $2.58 billion, according to its SEC 13-F filings, the largest of which was its stake in Yahoo Inc., consisting of roughly 12.3 million YHOO shares valued at $484 million.
According to FactSet, through March 31, 2016 Starboard has waged 46 campaigns and gained a total of 66 board seats since its inception in 2011.
Jeffrey Smith, the co-founder, chief executive and chief investment officer of Starboard, is known as one of the most feared men in corporate America these days. Indeed the recent $4.83 billion sale of Yahoo’s (NASDAQ: YHOO) core business to Verizon (NYSE: VZ) is said to have come to fruition largely as a result of unrelenting pressure exerted by Starboard.
Starboard was spun off in 2011 from hedge fund Ramius LLC, a subsidiary of the Cowen Group Inc. (NASDAQ: COWN) — whose chairman Peter A. Cohen, was the former vice chairman of Republic New York Corp. and former chairman and CEO of Shearson Lehman Brothers.
Smith previously served as vice president and board member of his father’s company, the Fresh Juice Company, until it was reportedly sold for $20 million in 1998. He began his career in the M&A department at Société Générale, after graduating from the Wharton School of Business with a BS in Economics.
Smith currently serves on the board of Yahoo! Inc., and is the chairman of Advance Auto Parts Inc. He was formerly chairman of Darden Restaurants Inc. and Phoenix Technologies Ltd., and formerly served on the boards of Quantum Corp., Office Depot Inc., Regis Corp., Surmodics Inc., Zoran Corp., Actel Corp., Kensey Nash Corp., and S1 Corp.
Photo: Jeffrey Smith, Co-Founder, CEO & CIO of Starboard Value LP.