This week's takeover offer for governance software provider Diligent has been labelled "low and opportunistic'' by brokerage Craigs Investment Partners, which is urging shareholders to vote against the proposal.
US private equity fund Insight Venture Partners is offering Diligent shareholders $7.39, or a total $941million, for the company.
Craigs broker Peter McIntyre said the $7.37 was "low and opportunistic and shareholders should vote against the proposal''.
"Unfortunately, unless a superior competing takeover offer is made, it seems likely the offer will succeed,'' he said.
Mr McIntyre noted only 50% shareholder support was required to proceed to compulsory acquisition and 35% of shareholders were already committed.
Diligent is incorporated in Delaware, in the US, so is subject to its takeover rules of a "simple majority'', known as 50% + 1, as opposed to New Zealand's Takeovers Panel requirement to gain 90% of shareholder votes to effect a 100% takeover.
Mr McIntyre said while the $7.39 offer price by Insight was a 31% premium to the close on February 12, it was only 4% above Craig's updated spot valuation as a standalone business, of $7.11 share.
While Craigs base case $7.11 share valuation assumed there would be moderate success for the soon-to-be-launched Teams product, Mr McIntyre said more bullish scenarios could justify a valuation of more than $9 share.
"We also believe the timing for current shareholders is poor, coming after a period of sustained weakness in SaaS [software as a service] company valuations,'' Mr McIntyre said.
