Cloud-based connectivity software provider LogMeIn has entered into a definitive deal to be purchased by private equity firms Francisco Partners and Evergreen Coast Capital for $86.05 a share, valuing the company at approximately $4.3 billion in total. The decision to exit the public market was announced earlier this month, stating that the agreement will help them achieve the next stage of their growth and expansion.
Bill Wagner, president, and CEO of LogMeIn, said he felt the price reflects the company's true worth. "This transaction acknowledges the significant value LogMeIn and provides our stockholders with a meaningful and certain cash offer at a compelling premium," he said. "We believe our partnership with Francisco Partners and Evergreen will help put us in a position to deliver the operational benefits to achieve sustained growth over the long term."
Reports began to circulate the company was for sale earlier in the year, and the all-cash deal was negotiated at a 25 percent per share markup based on the September 18 unaffected closing stock price – the day before rumors surfaced about the company’s hunt for new owners.
LogMeIn co-founders Michael Simon and Marton Anka met after Simon, who was CEO of Uproar at the time, offered a significant reward to anyone who could breach the security of his web-based gaming company systems. “We gave away $1 million online,” Simon remembered. “You can imagine that every hacker in the world was trying to get into our servers.”
Anka came on as a security consultant and, according to Simon, it was his work at Uproar that built the foundation for the RemotelyAnywhere application – which subsequently became LogMeIn after the two launched the Budapest-based company in 2003. Initially called 3am Labs, the company began rolling out free trial versions of its software prior to offering an upgraded option for a fee.
The company declined venture capital investments in the early years, opting to fund itself with initial investments made by Simon and another Uproar founder and revenues made from those first sales. The co-founders eventually went on to partner with private equity firms, raising $30 million over three funding rounds before going public in 2009. The company also transitioned from being known as 3am Labs to LogMeIn and began to grow in earnest after building a new headquarters in Boston.
Like many large enterprise software firms, they have mainly expanded through acquisitions that bring in augment their own product offerings and gain exposure to broader markets. Currently, the company provides an extensive portfolio of remote access and unified communications software, including LogMeIn Pro, LogMeIn Central, LogMeIn Rescue, Bold360, join.me, Jive, LastPass, GoToMeeting, GoToWebinar, GoToAssist, GoToMyPC, OpenVoice, and Grasshopper.
Their offerings may be one of the reasons that LogMeIn caught the eye of those at Elliott Management, who reportedly swooped in to claim a stake after stocks tumbled close to 28 percent in 2018. According to a SEC filing made by Elliott at the time, the private equity firm owned 2.4 percent of the LogMeIn’s total shares. Jessie Cohn, a senior partner and head of Elliott’s North American Activism division, held a seat on LogMeIn’s board of directors from January 2017 to April 2018.
“LogMeIn has a compelling portfolio and leadership in the unified communications and collaboration, identity and digital engagement markets,” said Andrew Kowal, senior partner at Francisco Partners. “We look forward to working with Bill and the leadership team at LogMeIn to accelerate growth and product investment organically and inorganically.”
"This investment builds on the strengths of our infrastructure and security software franchise, and we are thrilled to partner with the company to achieve its long-term strategic vision," added Dipanjan 'DJ' Deb, co-founder, and CEO of Francisco Partners.
The deal is expected to close in mid-2020, subject to a 45-day 'go-shop' period for LogMeIn, which provides the firm with an opportunity to find a buyer willing to offer a better price.