Vector Capital offer for Halogen Software is fair, says Canaccord Genuity

The Vector Capital offer for Halogen Software (Halogen Software Stock Quote, Chart, News: TSX:HGN) is a good one and will not likely be bested, says Canaccord Genuity analyst Robert Young.

This morning, Halogen Software announced it had entered into a definitive agreement to be acquired by Saba Software, a portfolio company of Vector Capital, for a total value of of approximately $293-million, or $12.50 a share.

“The transaction provides compelling and certain value, an attractive premium and liquidity to our shareholders, after a comprehensive strategic alternatives review process,” said Rob Ashe, the chairman of Halogen’s recently formed special committee. “Teaming up with Saba also strengthens and accelerates Halogen’s future growth prospects; these are two pioneers in learning and performance, who share a strong vision for the future of talent management.”

Young says he sees it as unlikely that a better bid for Halogen will emerge. He explained why.

“We believe this is a good outcome for investors as shares have not been at this level since early 2014, and represents a 9% premium to its IPO price of C$11.50. We see no obvious regulatory risks and believe the probability of a premium competing bid is low, ” said the analyst, adding: “Despite our longer-term positive outlook on Halogen Software, the company has faced competition and churn hurdles leaving it in the midst of a transition year in 2017. While we believe that Halogen has a strong, organic product focused on the mid-market, we do not see it as a unique product demanding a premium multiple.”

In a research update to clients today, Young maintained his “Hold” rating, but raised his one-year price target on the stock from $10.00 to $12.50.

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