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Absolute Software’s Acquisition by Crosspoint Capital Partners: A Tale of Undervaluation and Potential Upside

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Absolute Software’s Acquisition by Crosspoint Capital Partners: A Tale of Undervaluation and Potential Upside

Absolute Software Corporation, a provider of cybersecurity software, is making headlines as private equity firm Crosspoint Capital Partners plans to acquire it for $11.50 per share. This proposed acquisition has sparked a debate about the company’s valuation and the potential upside of the deal.

The Acquisition Offer: A Controversial Valuation

One of the main owners of Absolute Software, Edenbrook Capital, has expressed disapproval of the proposed acquisition price. According to Edenbrook, the current offer significantly undervalues the company compared to previous deals in the cybersecurity software sector. They estimate Absolute Software’s fair value to be around $25 per share, more than twice the current offer.

The Potential Upside: A Matter of Multiples

Edenbrook notes that Tufin Software Technologies, a competitor with a similar growth and margin profile to Absolute Software, was acquired at 6.7x EV/TTM ARR. If Absolute Software were valued at this multiple, its share price would be $25.16, a staggering 121% more than the current share price.

The Prospective Buyer: Crosspoint Capital Partners

Crosspoint Capital Partners, a reputable player in the infrastructure software, cybersecurity, and privacy sectors, is the prospective buyer. With a history of investing in cybersecurity software companies, Crosspoint could potentially bring significant resources and expertise to Absolute Software.

The Future of Absolute Software: An Event-Driven Setup

The acquisition of Absolute Software presents an intriguing event-driven setup. There’s a possibility that Crosspoint might increase the current offer under pressure from a significant shareholder like Edenbrook. There’s also a chance that other strategic buyers might present competing bids. While there’s no guarantee of a price increase, the apparent undervaluation of Absolute Software suggests potential for a better offer.

Conclusion: A Watchful Eye on the Shareholder Meeting

The industry is buzzing about this scenario, and everyone is focused on the upcoming shareholder meeting and the future direction of Absolute Software. Stay tuned for more updates on this exciting development.

Author : Equisights Team

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