Are Solera Shareholders Getting Enough in the Buyout?

By Chris Lange Published Sep 14, 10:55AM EDT

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Solera Holdings Inc. (NYSE: SLH) made a comeback in Monday morning’s session after struggling over the past 52 weeks. This comeback seems to be work of a brand new merger agreement. The company announced that it has entered into a definitive merger agreement in which an affiliate of Vista Equity Partners will acquire Solera in a transaction valued at approximately $6.5 billion, including the existing net debt of Solera.

Vista will acquire 100% of the outstanding shares of Solera common stock for $55.85 per share in cash in the merger. The purchase price represents an unaffected premium of 53% over Solera’s closing share price of $36.39 on August 3.

Solera’s board of directors unanimously approved the merger agreement, and recommended that Solera stockholders vote their shares in favor of the merger.

Tony Aquila, Solera’s founder, chairman and CEO, commented on the acquisition:

This transaction delivers immediate compelling value to our stockholders and represents a pivotal milestone for Solera in partnering with Vista. It not only recognizes our innovative company and talented employees, but also provides us with the optimal flexibility to proliferate our world-class solutions and services for our customers. We are extremely excited about working with Vista to further strengthen Solera’s global leadership in risk and asset management technologies.

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Robert F. Smith, Vista’s founder, chairman and CEO, said:

We are thrilled to be partnering with Solera. For almost half a century, Solera has been serving the insurance and automotive industries with innovative software and information solutions. With the portfolio of products the Company has built and acquired, combined with the vision of its leadership, we believe Solera is incredibly well positioned for the next fifty years. The mission is clear and the opportunity is there to continue to transform how physical assets are managed and insured.

A few analysts weighed in on Solera ahead of the merger announcement:

Robert Baird downgraded the company to a Neutral rating from Outperform and raised the price target to $56 from $53.
SunTrust has a Buy rating and raised its price target to $55 from $50.
Raymond James has an Outperform rating but lowered its price target to $50 from $55.

So far in 2015, Solera shares are down 2.2% year to date, while over the course of the past 52 weeks shares are down over 16%.

Shares of Solera were up 8.8% at $53.80 Monday morning. The stock has a consensus analyst price target of $49.31 and a 52-week trading range of $36.14 to $60.00.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.