Robbins LLP: Acquisition of Diligent Corporation (DLBDF) by Insight Venture Partners LP May Not Be in Shareholders’ Best Interests
Robbins LLP are investigating the proposed acquisition of Diligent Corporation (OTC US: DLBDF) by Insight Venture Partners (Private). On February 15, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Insight will acquire Diligent. Under the terms of the agreement, Diligent shareholders will receive $4.90 in cash for each share of Diligent common stock.
Is the Proposed Acquisition Best for Diligent and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Diligent is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $4.90 merger consideration represents a premium of only 25% based on Diligent’s closing price on February 8, 2016. This premium is significantly below the average one day premium of nearly 46.9% for comparable transactions within the past five years. Further, the $4.90 merger consideration is below the target price of $5.05 set by an analyst at Forsyth Barr on October 21, 2015. In the last three years, Diligent traded as high as $6.60 on May 3, 2013, and most recently traded above the merger consideration – at $4.95 – on October 3, 2013.
On November 10, 2015, Diligent reported strong earnings results for its third quarter 2015. For the quarter ended September 30, 2015, total revenue was $24.9 million, an increase of 16% compared with $21.4 million in the third quarter of 2014. In commenting on these results, Diligent President and Chief Executive Officer Brian Stafford remarked, “We continued to build strong sales momentum in the third quarter, which from a bookings perspective was the largest quarter in gross sales that we have had in two years, led by significant upsells from our existing customers. We are still building momentum in our new growth markets with nearly as many newly signed customers in those markets in Q3 as we had signed in the first half of the year. In addition, our new D&O product module has received robust interest and early sales traction from our customers. From an operational perspective, we continue to be focused on implementing sustainable systems and process improvements – such as our recent deployment of salesforce.com and Marketo – that will allow us to efficiently scale and support our rapid growth.” On October 20, 2015, Diligent announced that it acquired all assets of BoardLink, a Software-as-a-Service (SaaS) provider of board and leadership team collaboration solutions, from Thomson Reuters for approximately $10 million in an all cash transaction. The acquisition of BoardLink added more than 250 customers and approximately 9,000 users to Diligent.
In light of these facts, Robbins LLP is examining Diligent’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.
Diligent 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. Diligent 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.