Canadian cybersecurity stock Magnet Forensics (TSE:MAGT) soared nearly 14% earlier today after the company announced that it reached a deal to be bought out by software investment company Thoma Bravo for C$44.25/share (about C$1.8 billion equity value). MAGT’s board unanimously approved it, and as a result, the stock jumped from its previous closing price of C$38.35 to today’s closing price of C$43.66, just under the deal price.
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It’s interesting that the company got acquired and is now going to go private since it only went private in April 2021. Nonetheless, whoever invested in its $17/share IPO is now sitting on hefty returns. Assuming the transaction closes, Thoma Bravo aims to combine Magnet and Grayshift LLC, a mobile device forensics company, as they can complement each other to “create a powerful end-to-end digital investigations platform.”
Since the current share price is so close to the deal price, the market anticipates that the deal will go through, leaving little room for merger arbitrage. If the deal doesn’t go through, however, the stock can fall back to where it came from and potentially even lower eventually, as we expressed our valuation concerns about the stock just one month ago.
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