Squarespace (SQSP) announced today an increased offer from Permira, a global investment firm, to acquire the company, now valued at $7.2 billion. Specifically, Permira will raise its bid to $46.50 per share in cash, up from the previous offer of $44 per share.
To provide some context, Permira first announced its intention to acquire the website design software company for $6.9 billion in May this year.
Why Has Permira Raised the Offer for SQSP?
The revised proposal from Permira comes in response to a recommendation by proxy advisory firm Institutional Shareholder Services (ISS) for Squarespace investors to reject Permira’s earlier bid. ISS had expressed concerns that the sale process failed to fully realize value for shareholders, especially considering Squarespace’s strong operational performance and positive outlook.
Permira Shows Commitment to Acquiring Squarespace
In light of these concerns, the new offer indicates that Permira remains highly interested in acquiring Squarespace. The company supports businesses in digitizing operations and enhancing branding, an increasingly important service as more companies look to expand their online presence. Consequently, Permira’s new offer price represents a 36.4% premium to SQSP’s 90-day volume-weighted average trading price of $34.09.
Additionally, it’s important to note that Permira’s latest bid exceeds Squarespace’s closing price on Friday of $45.30, which was already higher than the original offer. Following this development, the transaction has been approved and recommended by a special committee of Squarespace’s board and will proceed as a tender offer.
Moreover, Squarespace had previously indicated that going private would provide the company with the flexibility and resources needed to support entrepreneurs in building stronger online brands.
Is Squarespace a Good Stock?
Analysts remain cautiously optimistic about SQSP stock, with a Moderate Buy consensus rating based on four Buys and 11 Holds. Over the past year, SQSP has increased by more than 40%, and the average SQSP price target of $43.30 implies a downside potential of 6.4% from current levels.
