Q4 Inc (TSX:QFOR) is urging its shareholders to vote in favour of its proposed $257 million acquisition by Sumeru Equity Partners.
The shareholder letter comes after major shareholder Finsight Group called on shareholders to reject the deal, calling the offer “grossly inadequate.”
Sumeru’s takeover proposal has a unanimous recommendation from Q4’s Board (excluding conflicted directors) and the Special Committee overseeing the strategic review process, Q4 noted.
The arrangement presents a 36% premium over Q4's share price on the last trading date before the transaction announcement, but the bid is also only about half of the $12 a share Q4 was worth when it went public in October 2021.
And while the methodology behind the offer price values Q4 at roughly three times its annual recurring revenue of $56-million, similar companies, Finsight said, are valued at between 6.1 and 10.6 times their annual recurring revenue.
But Q4 said that independent valuation by Stifel Nicolaus confirms that the consideration falls within the fair market value range of $5.50 to $6.80 per share.
The deal came after a “robust and independent” review process, Q4 noted.
Finsight’s “misguided campaign” is not in the best interest of Q4 shareholders, the company wrote in the letter.
“The notion that Finsight has a better line of sight than management and the Board into the dynamics of Q4’s business and its future performance is deliberately misleading,” it told investors. “The downside risk for Q4’s business – and for its shareholders if it remains public – is very real.”
Shareholders have until January 22, 2024, at 10 am ET to vote.