The possibility that cyber security company Imperva Inc. (NYSE: IMPV ) will be sold continues to excite investors, leading the company's share price to jump 21.1% on NASDAQ on Friday, in a particularly large trading turnover. After this rise in share prices, the company's market cap totaled $1.7 billion.
This hike followed a "Bloomberg" report that Cisco, IBM, and a joint venture of the private equity fund Vista Equity Partners and defense technology firm Raytheon had bid to buy the firm. The article also mentioned further potential buyers: Fortinet, which, like Imperva, also deals with information security, and is traded on NASDAQ at a market cap of $6.3 billion; and Akamai, which deals with enhancing online content transfer efficiency. Akamai, co-founded by Israeli Daniel Lewin, killed in the 9/11 attacks, is traded on NASDAQ at a $9.1 billion market cap.
High-premium exit?
Imperva, founded by Shlomo Kramer and managed by CEO Anthony Bettencourt, provides organizations with information security solutions. The company is headquartered in Redwood Shores, California and has offices in Tel Aviv and Rehovot. Three months ago, the activist hedge fund Elliott Associates invested in the company; following pressure from the new investor to pursue action that will generate value for investors, Imperva hired a financial consultant - Qatalyst Partners - to scout for such strategic options. According to "Bloomberg", Cisco, IBM and the Vista-Raytheon venture expressed interest in buying while Imperva had held talks with Fortinet and Akamai at the same time. According to the report, in two weeks, the process will lead to firm acquisition offers being submitted. None of the companies involved commented on the "Bloomberg" report.
The number of potential buyers might be indicative of the volume of the premium Imperva will be able to gain if it is sold. Elliott Associates' investment and the moves that followed breathed life into the share, leading it to rise 30% to its current price of $52.6 (higher than analysts' average target price for the share). At the same time, the share had already been traded at higher prices in the past. The share's price has dropped 13% since the beginning of 2016, and nearly 33% from its November 2015 record price. Imperva reported disappointing financial results for the second quarter of 2016 after publishing a profit warning, with a 3.2% decline in revenue from the first quarter, to $57.9 million. These weak results were due to a 28.8% drop in product and license sales, compared with the previous quarter, to $14.8 million, while the services sector continued growing. In the second quarter, Imperva sustained $7.3 million non-GAAP net losses. In the third quarter, the company expects to resume growing, with a forecasted growth of 6.5% for the entire year, which will lead to $249-251 million revenue. In 2016, the company is expected to sustain losses, compared with a net profit in 2015.
The companies involved declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on September 25, 2016
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