Anaplan to be Taken Private; What Should Investors do Now?

Cloud-based business planning software provider Anaplan (NYSE: PLAN), one of the strongest rivals of SAP (NYSE: SAP), Oracle (NYSE: ORCL), and IBM (NYSE: IBM), is gearing up to be taken private by Thoma Bravo in a $10.7 billion deal. The deal is expected to close in the first half of 2023.

Following the announcement of the agreement, Needham analyst Scott Berg revised his stance to reflect the consequences of the agreement and downgraded the stock to Hold, based on valuation. “SaaS companies like Anaplan have historically traded at 2-10x forward year revenue multiples. Given Anaplan’s top-quartile revenue growth rate, we think it should trade above the upper end of the range on our CY22 (FY23) forecast,” noted Berg.

Thoma Bravo has engaged in strategic acquisitions of publicly-traded companies in the past as well, especially companies operating in the Enterprise Software and Cybersecurity spaces. Last year, it made two key acquisitions in quick succession —cybersecurity firm Proofpoint and online mailing and shipping service provider Stamps.com, both of which were listed on the Nasdaq exchange before acquisition.

Berg believes that Anaplan charmed Thoma Bravo with its strong product portfolio serving a wide market. Significantly, research firm Nucleus Research determined that more than 72 million workers worldwide are involved in business planning.

Moreover, PLAN’s expected growth rate for the 2023 fiscal year is 30%, driven by recent operational improvements and product strength, which is impressive, especially from the point of view of a potential acquirer.

Importantly, the analyst believes that the offer Thoma Bravo has made is the farthest any competing buyer can make, although Anaplan might seek better offers. This is a key observation that explains the analyst’s Hold rating.

Putting leadership concerns to rest, Berg pointed out that current CEO, Frank Caldaroni, is most likely to continue with his position at Anaplan post-acquisition. The analyst also notes that the company’s sales execution and messaging solution has displayed significant improvement over the past six months, which makes him believe that business under Caldaroni was gathering stronger momentum, which is a positive.

Wall Street consensus is cautiously optimistic about Anaplan, with a Moderate Buy rating based on six Buys and eight Holds. The PLAN stock predictions indicate an average price target of $65.18, which suggests an upside potential of 0.9% as of 10.17 a.m. EST, Tuesday.

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