Double-Take to Be Acquired by Vision Solutions

Double-Take Software, Inc. entered into a definitive merger agreement to be acquired by Vision Solutions, Inc., a portfolio company of Thoma Bravo, LLC, in a transaction with a net offer value of approximately $242 million.

The Double-Take Board of Directors unanimously approved the agreement and has recommended the approval of the transaction to Double-Take’s stockholders.

Under the terms of the agreement, Double-Take stockholders will receive $10.55 in cash for each share of Double-Take common stock they hold, representing a premium of approximately 39% and 21% to Double-Take’s enterprise value and closing share price of $8.71, respectively, on April 9, 2010, the last business day prior to Double-Take’s announcement that its Board of Directors was considering indications of interest to acquire the Company.

“The board of directors of Double-Take, working with our legal and financial advisors, has been reviewing strategic alternatives for the company for the past several months. During that time, we have had the opportunity to share the Double-Take story and this transaction represents the successful conclusion of that process. Our board of directors and the management team are extremely pleased to announce this transaction and look forward to developing and supporting innovative recovery solutions for our clients globally,” said Dean Goodermote, Chairman, President and CEO of Double-Take.

“The offer for Double-Take Software underscores our focus to provide customers with the best information availability products and the most exceptional support and service in the industry,” said Nicolaas Vlok, president and CEO of Vision Solutions. “Double-Take has built a strong worldwide information availability business, and we are excited to have its world-class employees, customers and partners join the Vision family. With our expanded resources and scale, we will increase our ability to innovate and be the solution provider our customers can count on for their information availability needs.”

The transaction is subject to customary closing conditions, including the expiration or earlier termination of the Hart-Scott Rodino waiting period and the approval of Double-Take stockholders. The transaction is not subject to a financing condition, and debt commitments for the merger consideration have been received by Vision Solutions. Double-Take expects the transaction to close in the third quarter of 2010.

BofA Merrill Lynch and Thomas Weisel Partners LLC are serving as financial advisors to Double-Take Software. Hogan Lovells US LLP is serving as legal counsel to Double-Take Software. Kirkland & Ellis, LLP is serving as legal counsel to Vision Solutions. Jeffries & Company is providing the financing for Vision Solutions.

Comments

Based in Irvine, CA, with offices in EMEA and Asia, Vision Solutions is practically unknown in the storage industry because it is concentrated only on IBM i (i5/OS) and AIX environments running on Power System for its high availability, DR (with CDP), migration, replication and system management solutions. This company is privately held by Thoma Bravo, LLC.

Double-Take Software's chairman and CEO Dean Goodermote recently said it "received unsolicited, did nonbinding, written conditional indications of interest to acquire the company," but the name today revealed of Vision Solutions was surprising even if the two companies were already business partners.

Born in 1991 and headquartered in Southborough, MA, Double-Take was formerly NSI Software and realized a successful $55 million IPO in 2006. In software for data recovery, the firm recorded during fiscal ended December 31, 2009 revenues of $83.2 million (-14% compared to 2008)) for a net income of $13.5 million.

Sales for 1Q10 were expected to be in the range of $20.0 to $21.2 million but reach only $18.9 million, an increase of 4% from the $18.2 million in 1Q09. Cash was $89 million at the end of March 2010. Today's market cap was $217 million, to be compared to $242 million, the price offered by Vision Solutions and that apparently doesn't satisfy several lawyers (see today's press releases).

During this last three-month period, resellers generated 61% of total revenues, distributors 24% and OEMs, primarily HP, 7%. Sales by Dell, largest reseller, totaled 14% of total revenues, down from the 17% in 4Q09. Largest distributor Tech Data accounted for 14% in 1Q10. Sales by geography: 62% coming from North America, 30% from EMEA and 8% from Asia.

Double-Take acquired TimeSpring to get CDP and emBoot to obtain network booting technology for respectively $8.3 million and $9.6 million in 2008, but didn't have de-dupe. Remember also that the U.S. software company bought its European distributor Sunbelt System Software in 2006.