A new chapter has been written in the story between Exactech (EXAC 50.20, +7.85 +18.5%) and private equity firm TPG Capital. In a deal which was announced on October 23, EXAC agreed to be acquired by TPG for $42 per share in cash – a 31% premium to the share price ahead of the open that day. News out today, though, was that EXAC and TPG amended the aforementioned merger agreement, now agreeing on a purchase price of $49.25/share after the company disclosed in an 8-K filing the receipt of an unsolicited, non-binding proposal from a non-U.S. private equity firm for $49.00/share in cash.
It may be prudent here to give some background on the October merger agreement. The deal was announced ahead of the open that day, and was agreed upon by Dr. Bill Petty and Betty Petty, EXAC founders. The deal valued EXAC at $625 million and was expected to close in the first quarter of 2018. Then, about four trading sessions later EXAC announced Q3 earnings.
Skip ahead about a month and a half and EXAC moves markedly higher in reaction to this morning’s news of the amended merger agreement with TPG. The new agreement values EXAC at $737 million and is about 17.3% higher than the previously agreed merger consideration yet is still expected to close in the first quarter of 2018.
Pursuant to a rollover and voting support agreement entered into at the time of the amended merger agreement, the company’s founders, CEO and certain other management shareholders have agreed with TPG to exchange a portion of their shares in the transaction, representing about 18.8% of the company’s outstanding common stock, for new equity securities in the post-closing ownership of the company at a valuation equal to or less than $49.25 per share.
The increased offer was likely due in part to information disclosed by EXAC in an 8-K filing this morning. That filing stated that, “On November 7, 2017, the Company received an unsolicited, non-binding proposal from a non-U.S. private equity firm and certain of its affiliates, including one of its portfolio companies which conducts orthopaedic implant device operations (“Party A”), to acquire 100% of the Company’s outstanding common stock at $49.00 per share in cash in a statutory merger transaction.”
The stock, then, trades in reaction to the increased offer.