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Adam Belsher CEO of startup Magnet Forensics, which specializes in data recovery software in Waterloo, Ont, Sept. 26, 2013.Fred Lum/The Globe and Mail

An independent proxy advisory firm has endorsed a proposed takeover of Magnet Forensics Inc. MAGT-T by private equity giant Thoma Bravo, delivering a blow to a dissident investor trying to stop the $1.8-billion deal.

Egan-Jones Proxy Services stated “we believe that there is compelling reason” to vote for the deal “given the significant premium and equity value transaction that will be distributed to the shareholders,” Magnet said in a release Wednesday.

Egan-Jones said the deal “is the best available strategic alternative” for Magnet “to unlock and maximize potential shareholder value,” adding deal opponent Nellore Capital Management, which owns 10.6 per cent of Magnet’s subordinate voting shares, “has not offered a superior alternative that will maximize value creation,” Magnet added.

Nellore founder Sakya Duvvuru said in an interview, “We didn’t get an opportunity to speak with Egan so I don’t know that they gave us a full, fair shot.” Magnet spokesman Neil Desai said in an e-mail the company was “pleased” by Egan-Jones’s report.

Egan-Jones is a lesser-known proxy advisory firm than Institutional Shareholder Services, which is expected to make its call Thursday, or Glass Lewis. These firms typically carry some influence over fund managers on shareholder votes.

Nellore countered with a release Wednesday, alleging the independent Magnet directors that ran the process let shareholders down by accepting the lowest premium ever offered for a public company by Thoma – 15.4 per cent – based on the prior day’s stock closing price. It reiterated its call to shareholders to vote down the deal later this month. The directors have said they negotiated the price up by 30 per cent from Thoma’s initial bid in a “robust” process.

Magnet agreed in January to a deal for Thoma to pay $44.25 a share to subordinate voting stockholders and $39 a share to the three multiple voting shareholders, chief executive officer Adam Belsher, chief technology officer Jad Saliba, and chairman Jim Balsillie. The trio are rolling over 55 per cent of their stock into the privatized entity, which Thoma plans to merge with portfolio company, Grayshift LLC, to create a cybercrime investigation software category killer. The deal requires majority voting support from each shareholder class.

Nellore says the offer to subordinate voting shareholders is too low and that it would prefer either a higher price or that Thoma roll Grayshift into Magnet in exchange for stock in a still-public company. Mr. Desai, the Magnet spokesman, countered that the deal provided an “excellent” outcome for shareholders and that rollover requirements are common in private equity deals.

Four other shareholders recently told The Globe and Mail they also don’t support the deal. The Globe is withholding the identities of the four because they are describing matters that are confidential to their firms.