Darrel Heaps, Q4 Inc. CEO, rings the bell at the Toronto Stock Exchange Oct. 25, 2021.Luke & Allie Cleland/Courtesy of manufacturer
Barely two years after going public amid a frenzy of tech listings, Q4 Inc. QFOR-T shareholders have approved the company’s quarter-billion-dollar plan to be taken private.
More than 81 per cent of votes cast at a special meeting Wednesday were in favour of the $257-million offer that Silicon Valley-based Sumeru Equity Partners originally made last November to buy the investor relations software provider. Shareholders blessed the transaction despite vocal opposition from New York-based Finsight Group Inc., which owns roughly 5.6 per cent of Q4 shares.
Finsight was primarily concerned that investors holding 34 per cent of Q4 stock, including chief executive officer Darrell Heaps, would be allowed to roll over their shares as part of the deal with Sumeru, meaning they do not have to relinquish their equity in the company.
That made the transaction “potentially fraught with irreconcilable conflicts,” Finsight said in a December, 2023, letter to Q4′s board of directors, as minority shareholders would be “forced to accept the cash consideration.”
Sumeru’s offer equated to $6.05 a share, a 36-per-cent premium to the value of the company’s shares before the offer was announced.
However, that valuation also represented barely half of the $12 a share Q4 was worth when it first went public in October, 2021. Citing recent acquisitions of comparable companies – such as EQS Group AG’s November, 2023, sale to software investment giant Thoma Bravo for US$434-million – Finsight argued Q4 was worth at least double what Sumeru was offering.
Short of such a dramatic price increase, Finsight said Q4 “should remain a standalone public company.”
In the face of Finsight’s resistance, the deal won praise from analysts – Maxim Matushansky and Paul Treiber of RBC Capital Markets said the offer was “attractive and provides certainty” – while proxy advisory firms Institutional Shareholder Services and Glass Lewis both recommended approval.
The deal required approval from at least two-thirds of all Q4 shareholders, including a majority of investors who would not be allowed to roll over their shares, in order to proceed. More than 70 per cent of votes cast by non-rolling shareholders at Wednesday’s meeting were in favour of the transaction.
Mr. Heaps said Q4 was pleased with the outcome. In a statement, he acknowledged shareholders for “understanding the strategic rationale for this transaction.”
After the results were disclosed, Finsight CEO Leo Efstathiou said by e-mail that his company “congratulates Sumeru Equity Partners on their acquisition and wishes them, Q4′s employees and the rolling shareholders good luck in their next chapter.”
Jameson Berkow