Smartsheet has announced that it will delist and be taken private after receiving an offer from Blackstone and Vista Equity Partners that values the Company at $8.4 billion. Once the deal closes, Blackstone and Vista Equity will acquire Smartsheet shares for $56.50 per share. While the share price has been rising steadily over the last six months, the shares rose 6.91% over the last five days after the announcement.
The buyers have stated that the deal represents a premium of approximately 41% to the volume-weighted average closing price of Smartsheet stock for the 90 trading days ending on July 17, 2024, the last trading day before rumours of the sale emerged. It is also a 16% premium on the highest closing stock price over the last 12 months ending July 17, 2024.
Mark Mader, CEO of Smartsheet, commented, “For more than a decade, we have built a thriving community of employees, partners, and customers, each focused on building and benefiting from Smartsheet’s industry-leading work management platform. Our next phase of growth and customer success is underway, and we look forward to partnering with Blackstone and Vista Equity Partners to accelerate our vision of modernizing work management for enterprises globally.
“This transaction is a testament to our employees’ outstanding work in serving customers and partners and building an enterprise-grade, market-leading platform. As we look to the future, we are confident that Blackstone and Vista’s expertise and resources will help us ensure Smartsheet remains a great place to work where our employees thrive while driving innovation and delivering even greater value for customers and stakeholders.”
The buyers speak
Martin Brand, Head of North America Private Equity and Global Co-Head of Technology Investing at Blackstone, and Sachin Bavishi, a Senior Managing Director at Blackstone, said, “Across increasingly distributed, cross-functional and global workforces, Smartsheet’s innovative and market-leading solutions are mission-critical in helping teams collaborate at scale to achieve superior results.
“We are excited to partner with Smartsheet’s management team to drive long-term growth by leveraging our and our partner Vista’s combined scale and resources to accelerate investments in the next generation of work management solutions.”
Monti Saroya, Co-Head of Vista’s Flagship Fund and Senior Managing Director, and John Stalder, Managing Director at Vista, issued the following statement, “Modern enterprises rely on Smartsheet’s simple and scalable solutions to manage a diverse range of business-critical processes every single day because they enable seamless collaboration, enhanced productivity and faster and more informed decision-making.
“We look forward to partnering closely with Blackstone and Smartsheet to support its ambitious goal of making its platform accessible for every organization, team and worker relying on collaborative work to achieve successful outcomes.”
Will this deal for Smartsheet close?
This is not a done deal. Arguably, with a positive trajectory in its share price since April. Will shareholders feel that there is enough of a premium? The board, however, has accepted the deal unanimously. It has recommended that shareholders concur and vote in support of the deal. There will be a special meeting for shareholders to vote on the deal. For some investors this might provide a good exit to free up funds.
Also, the agreement includes a 45-day “go shop” clause. Which allows Smartsheet to solicit offers from other private equity firms until November 8th, 2024. If the Smartsheet director can find another buyer with a higher premium, they can cease the agreement with Vista and Blackstone.
The deal is expected to close on January 31, 2025, in line with the end of Smartsheet’s fourth quarter and fiscal year, subject to normal compliance regulations and shareholder approval. Once complete, Smartsheet will delist from the NYSE and become a private company.
Enterprise Times: What does this mean
Following this announcement, there are more questions than answers. Are the buyers looking to change the leadership at Smartsheet? Or will Mader, who has been in charge for the last 18+ years, look to leave the Company after the acquisition? Smartsheet has already accepted the resignation of Stephen Branstetter, its COO, who will leave the company in November.
With the backing of new investors, how will they aim to accelerate the growth of Smartsheet globally? Will there be an acquisition spree to try and consolidate the market or bring in new tech tuck-ins to strengthen the positions?
Vista Equity Partners, alongside Elliott Investment Management LP, also owns Wrike. This means that Vista Equity has a large share in two of the leading work management platforms on the market. Another question is what will happen to Asana and monday.com. Both are listed companies but still under the control of their founders.
This story could still have several twists and turns, but the result could have a significant impact on the market. For customers, this could be good news, assuming the buyers are not going to focus on having the Company strip out costs to increase profitability. That, however, seems unlikely. Although Smartsheet has made several acquisitions, these are now well integrated into its platform.
It also isn’t clear whether the share split between the two investors will be equal or whether one will be a lead partner. Will this affect what happens in 2025?
