SonicWall Acquired By Investors For $717 Million

SonicWall Inc., a provider of network security appliances, said that it has agreed to be acquired by a group of investors led by Thoma Bravo, a private equity investment firm, for some $717 million or $11.50 per share, in an all cash deal.

The acquiring group includes the Ontario (CAN) Teachers' Pension Plan through its private investor department, Teachers' Private Capital. Ontario is an independent organization responsible for investing the pension fund and administering the pensions of Ontario's 289,000 active and retired teachers.

In mid-May, Thoma Bravo also acquired Double-Take Software Inc., a maker of data recovery solutions, for about $242 million, and in March it acquired Plato Learning Inc., an online learning company, for about $143 million.

SonicWall said that the deal will enable it to better fund new products and to fend off competitors. It was unclear how the acquisition will affect the company’s roster of 7,000 channel partners under its Medallion Partner program.

"Our agreement with Thoma Bravo represents an attractive valuation for our shareholders, and we look forward to closing the transaction as quickly as possible," said Matthew Medeiros, SonicWall president and chief executive.

SonicWall, which was founded in 1991 by brothers Sreekanth and Sudhakar Ravi and currently employs about 800 people, has been publicly-held since 1999.

In its most recent quarter, the company posted a $4.4 million profit on sales of about $55 million, a 17 percent jump in revenue and a whopping 158 percent spike in earnings when compared to the similar period last year. SonicWall holds about $200 million in cash and investments.

The vendor said that it is projecting sales for its second quarter to fall in the range of $55 million to $57 million with earnings of at least $.08 per share.

SonicWall board approves deal

SonicWall said that its board of directors has approved the transaction, which awaits confirmation by shareholders. Officials said that the matter is expected to close sometime between September and December of this year.

Thoma Bravo’s offer represents a 28 percent premium above the company’s $8.99 closing stock price last week and a 63 percent bump over its enterprise value, officials said.

Immediately following the agreement a number of law firms said that they will investigate a possible breach of fiduciary duty by SonicWall’s board in accepting the deal. In the days surrounding the transaction, SonicWall’s stock jumped from $8.72 to $11.28, where it has hovered ever since. The law firms contend that SonicWall might not have adequately shopped around for the best offer and in accepting the Thoma Bravo offer may have harmed shareholders.

BlackRock Advisors LLC holds the largest block of SonicWall shares with about 5.3 million shares valued at about $45.9 million and Ameriprise Financial Inc. owns about 4.5 million shares worth about $38.7 million. Combined the two institutional investors maintain holdings equal to 17.5 percent of the company.