BroadVision (Nasdaq: BVSN) will be taken private by Vector Capital, a San Francisco-based private equity firm. Current BroadVision stockholders will receive $0.84 per share in cash and BroadVision will operate going forward as a privately-held, independent software vendor. The offer was below the company's share price on the date when the deal was announced. Under a separate agreement with the holders of its outstanding convertible notes, BroadVision, through additional capital to be provided by Vector, will make cash payments totaling $16 million to retire the notes.
Vector Capital is a San Francisco-based private equity firm specializing in buyouts, spinouts and recapitalizations of established technology companies. Vector has taken private companies similar to BroadVision. Other Vector investments include LANDesk Software, Savi Technology and Corel Corporation, which Vector took private in 2003 and subsequently successfully turned around.
"With the current liquidity challenges of the Company and the challenges associated with being a small-cap public software provider, we feel that a cash offer today represents the best course for stockholders," said Dr. Pehong Chen, BroadVision's president and CEO.
The deteriorated and uncertain liquidity outlook, coupled with a continued challenging environment for software sales, the high costs of operating a public company and feedback from numerous potential strategic partners, most of whom declined to pursue discussions, led BroadVision to the conclusion that an outright acquisition of the Company in a cash transaction represented the most desirable outcome for its stockholders.
BroadVision reported second quarter license revenue of $3.4 million, less than 50% of the license revenue reported in the same quarter of the prior year, and total net revenue of approximately $15.5 million, nearly 9% below the midpoint of the company's range of guidance. Due poor sales and certain financial obligations created by the convertible notes, BroadVision's June 30 net cash balance was insufficient to meet its obligations in the second half of 2005.
During the dot.com boom BroadVision was one of the software market's highest fliers and in June of 2000 hit a stock price high of over $550 a share.
"We believe strongly that BroadVision's best opportunity for future stability and growth is as a private company," said Chris Nicholson, a partner at Vector Capital.
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