Vocus Inc.’s acquisition by GTCR Valor Merger Sub, Inc., an associate of Chicago-based private equity firm, GTCR LLC., was completed on May 30, 2014. The company was valued at $446.5 million, which GTCR agreed to pay in cash.
As per the agreement, GTCR acquired all the shares of Vocus for $18.0 per share. GTCR also purchased the company’s Convertible Preference shares for $77.3 million. As a result, Vocus’ shares will no longer trade on the NASDAQ Global Select Market.
GTCR selected Deutsche Bank Securities Inc., a division of Deutsche Bank (DB - Analyst Report) to serve as its financial advisor and Latham & Watkins LLP to act as its legal counselor. On the other hand, Stifel Financial Corp. (SF - Snapshot Report) served as a financial advisor to Vocus while Skadden, Arps, Slate, Meagher & Flom LLP served as its legal counselor.
GTCR LLC is a privately-held equity firm, which invests in financial services and technology companies. It provides cloud-based marketing solutions and offers products and services to increase user satisfaction and improve marketing efficiencies.
We believe that Vocus is an ideal acquisition target for the marketing suite it provides and its steady customer base. The company is targeting more customers and cloud opportunities in the small and medium business space. Furthermore, the company continues to acquire more customers for its marketing suite, which reflects growing demand.
It is noteworthy that Vocus has a debt-free balance sheet with $34.7 million in cash and short-term investments as of Dec 31, 2013. Additionally, Vocus’ transformation from a purely PR-centric business to a cloud-based marketing solutions provider is proving to be beneficial, especially with respect to total active subscribers.
Nonetheless, Vocus is facing ever-increasing competition from the likes of Marketo, Inc. in the software-as-a-service (SaaS) segment. User preference seems to have shifted toward SaaS-based Digital Marketing suites from standalone PR solutions. This practice is limiting Vocus’ growth prospects and profitability.
Moreover, Vocus reported adjusted loss per share of 4 cents in the fourth-quarter of 2013, which compared unfavorably with management’s guidance of earnings of 3 to 4 cents and earnings of 1 cent per share in the year-ago quarter.
Currently, Vocus carries a Zacks Rank #3 (Hold).