Dive Brief:
- Repay Holdings received an unsolicited acquisition offer Friday from an investor, Forager Capital Management, that’s seeking to buy the payments processing services provider, according to an April 17 letter from the investment firm.
- Forager, which already owns a 13% stake in Repay, said it offered to pay $4.80 a share in cash, noting that was a 75% premium to the stock’s 30-day volume-weighted average price of $2.75. The overall value of the transaction will be about $1 billion, based on a fully diluted 93.5 million shares outstanding, plus taking on the company’s debt, Forager Managing Partner Edward Kissel said by email.
- For its part, Atlanta-based Repay said in a Friday press release that it was open to the offer and would “review the proposal in consultation with the Company’s financial and legal advisors.” Spokespeople for Repay didn’t immediately respond to a request for further comment.
Dive Insight:
Nonetheless, Repay appears to have been standoffish when Forager first approached. The suitor said it was “disappointed” that the Repay board implemented a shareholder rights plan, which fend off unwanted offers, immediately after it reached out to the company on April 13 for exploratory talks.
“We believe this response is difficult to reconcile with a genuine commitment to maximizing shareholder value,” Forager said in its letter.
Forager publicly disclosed the offer as an exhibit to a filing with the Securities and Exchange Commission. ”We hope this will facilitate constructive discussions with the Board, with the goal of entering into a mutually agreeable transaction that is in the best interest of all shareholders,” Forager said in the letter.
Forager noted that there was no guarantee the talks would result in a deal. Still, the letter showed the investment firm has hired a major law firm, White & Case, in its quest to make a merger happen.
Kissel and the Forager partner who signed the letter, Johnny Wilhelm, are based in Birmingham, Alabama, according to their LinkedIn profiles.
Repay didn’t immediately respond to a request for additional comment on its review of the Forager offer. It also has major law firms advising it on the proposal, including Troutman Pepper Locke and Sullivan & Cromwell, according to its press release.
Repay has been trying to pull off an acquisition of its own, with an agreement last month to buy Kubra Data Transfer, a company that provides similar payments processing services in the utility and government sectors. Repay has faced opposition from another major shareholder with respect to that plan.
Repay proposed paying $372 million last month to acquire Kubra Data Transfer, but the investment firm Veradace Partners, which owns an 8.4% stake, objected to the acquisition on April 9 in a public letter attached to a press release.
