Blackbaud/Convio Deal Still Not Closed
March 23, 2012 Mark Hrywna
Blackbaud’s acquisition of rival software maker Convio won’t be completed in the first quarter of the year as original expected, as the Charleston, S.C., company extended the expiration of the deal for a third time, to April 4.
“While we will not meet our initial estimate for closing the acquisition by the end of this quarter, we are seeing progress in the DoJ’s (federal Department of Justice) review process,” Marc Chardon, Blackbaud’s chief executive officer, said in a released statement. “We remain committed to refiling our HSR (Hart-Scott-Rodino) Notification and Report as soon as appropriate.”
The expiration date of the tender offer, originally Feb. 22, may only be extended in increments of no more than 10 business days each. “The ability to extend our offer, that is included in the merger agreement, provides us needed flexibility during the HSR review process,” said Jon Olson, Blackbaud’s general counsel.
Blackbaud announced in January its intention to acquire the Austin, Texas-based firm for $275 million, with the hope of completing the transaction by the end of March. The original Feb. 22 deadline was extended until March 7, and again until March 21.
“It looks like to me the issue isn’t so much the tender offer as it is getting through the DoJ process,” said James Nixon III, a partner with Waller Lansden in Nashville, Tenn., who practices in the areas of mergers and acquisitions. “The way it can work, you make the initial Hart-Scott filing with DoJ, they can request other information about the deal and companies on an informal basis. You’d rather keep on informal basis, try to get them comfortable with the deal. If you get a formal request, it requires a lot of document production, effort and money.”
While none of the sides will comment, insiders say the DoJ is looking at potential issues of monopoly when the two largest industry players attend to merge.
As of 5 p.m. Eastern time on March 20, almost three-quarters of Convio’s nearly 19 million outstanding shares have been tendered, or about 14 million shares. Blackbaud reached an important threshold on March 7, with more than 50 percent of Convio’s shares tendered. Convio’s board, which approved the deal in January, held almost one-third of outstanding shares.
DoJ approval, with more than 50 percent tendered, Blackbaud would be able to complete a “long-form” merger, a process that usually takes four to six weeks.
If the percentage of shares tendered reaches 90 percent, then, pending DoJ approval, Blackbaud would be able to complete a “short-form” merger, which typically takes a few business days and doesn’t require a vote at a shareholder meeting.
Blackbaud believes it will reach the 90 percent threshold and complete a short-form merger — once the DoJ clearance has been obtained. Often, a large number of shares will be tendered in the final hours of the last day of the tender offer period.