Symyx Technologies acquired by Accelrys: fairness opinion by UBS
Deal terms
All-stock merger; each share of Symyx common stock exchanged for shares of Accelrys common stock at the Exchange Ratio. Implied per share value of the merger consideration of $5.07 based on the Exchange Ratio and the $6.50 closing price of Accelrys common stock on April 1, 2010. Structured as a 'merger of equals'.
Implied value per share by method vs. $5.07 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of UBS to the target board
Discounted cash flow assumptions
Symyx stand-alone DCF implied $5.80-$7.45 per Symyx share. Accelrys stand-alone DCF implied $6.20-$7.45 per Accelrys share (vs. $6.50 closing price 4/1/10). Pro forma combined company DCF implied $6.40-$8.30 attributable to an outstanding share of Symyx common stock based on the Exchange Ratio.
Selected public companies (6)
Actuate Corporation · Informatica Corporation · Medidata Solutions, Inc. · Open Text Corporation · Phase Forward Incorporated · TIBCO Software Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2010E Revenue | 1.9x | 2.2x | 4.3x | — | — |
| EV / CY2011E Revenue | 1.7x | 2.0x | 3.8x | — | — |
| EV / CY2010E EBITDA | 7.7x | 9.4x | 16.3x | — | — |
| EV / CY2011E EBITDA | 6.4x | 8.2x | 14.4x | — | — |
| Price / CY2010E Cash EPS | 11.6x | 19.1x | 26.3x | — | — |
| Price / CY2011E Cash EPS | 9.8x | 14.5x | 22.2x | — | — |
Selected precedent transactions (11)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2009-12-08 | QuadraMed Corporation | Francisco Partners LP | — |
| 2008-09-09 | Pharsight Corporation | Vector Capital / Tripos, Inc. | — |
| 2008-09-05 | Clarix LLC | Phase Forward Incorporated | — |
| 2008-06-19 | Insightful Corporation | TIBCO Software Inc. | — |
| 2008-06-13 | Clinphone plc | Parexel International Corporation | — |
| 2007-11-27 | Covance Cardiac Safety Services Inc. | eResearch Technology, Inc. | — |
| 2007-08-10 | MDL Information Systems, Inc. | Symyx | — |
| 2006-11-20 | Tripos, Inc. (Discovery/Informatics Business) | Vector Capital | — |
| 2006-11-13 | ClickFind, Inc. | DATATRAK International, Inc. | — |
| 2006-10-26 | Datalabs, Inc. | Clinphone plc | — |
| 2006-06-14 | Galt Associates, Inc. | Cerner Corporation | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| Transaction Value / LTM Revenue | 0.7x | 1.4x | 2.6x | — | — |
| Transaction Value / LTM EBITDA | 8.7x | 16.9x | 19.0x | — | — |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Accelrys Stand-Alone Discounted Cash Flow Analysis | DCF of Accelrys on a stand-alone basis using Accelrys management forecasts, unlevered after-tax free cash flows from April 1, 2010 through December 31, 2014, NOL carryforwards utilized in CY2015-2028, terminal values from 7.0x-10.0x CY2014E EBITDA and discount rates of 14.0%-18.0%; implied $6.20-$7.45 per Accelrys share vs. $6.50 closing price on 4/1/10. | $6.20–$7.45 |
| Pro Forma Combined Company Discounted Cash Flow Analysis | DCF of the combined company including net synergies, Accelrys NOLs and CY2015 Dow royalties, with 7.0x-10.0x CY2014E EBITDA terminal multiples and 14.0%-18.0% discount rates; implied $6.40-$8.30 attributable to an outstanding Symyx share based on the Exchange Ratio, versus $5.80-$7.45 on a Symyx stand-alone basis. | $6.40–$8.30 |
| Contribution Analysis | Reviewed relative contributions of Symyx and Accelrys for CY2009-2014 to combined revenue, EBITDA, EBITDA excluding Dow royalties and EBITDA with pre-tax net synergies. Implied Symyx contribution reference range of approximately 29.8%-77.0% (revenue 49.7%-51.9%; EBITDA 64.5%-77.0%; EBITDA ex-Dow royalties 40.1%-64.0%; EBITDA with synergies 29.8%-48.0%) versus implied enterprise value percentage attributable to Symyx of approximately 52.6% (approximately 49.6% on an equity value basis). | — |
| Accretion/Dilution Analysis | Pro forma effect of the Merger on Accelrys estimated EPS for 2010-2014 (calendarized), including net synergies and Accelrys NOLs; indicated the Merger would be accretive to Accelrys estimated EPS for 2010-2014 and accretive to combined company EPS attributable to a Symyx share relative to Symyx stand-alone estimated EPS for CY2010-2014. | — |
| Historical Stock Trading Review | Reviewed current and historical market prices of Symyx common stock and Accelrys common stock. | — |
Aggregate fee of $2.5 million for financial advisory services; a portion payable in connection with delivery of UBS' opinion and a significant portion contingent upon completion of the Merger. Expense reimbursement and indemnification also provided.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $94.2M | $102M | $108M | $122M | 9.0% |
| Revenue growth | 11.0% | 8.6% | 5.5% | 13.1% | |
| EBITDA | $15.4M | $21.9M | $24.4M | $29.8M | 24.6% |
| EBITDA growth | 48.1% | 42.2% | 11.4% | 22.1% | |
| EBITDA margin | 16% | 21% | 23% | 24% | |
| Implied EV / EBITDA | 6.8x | 4.8x | 4.3x | 3.5x |
Year-1 growth is against LTM at announcement ($84.9M revenue, $10.4M EBITDA); later years are year over year.
UBS used non-public financial forecasts and estimates for Symyx prepared by Symyx management and for Accelrys prepared by Accelrys management, together with net synergy estimates prepared jointly by both managements, in each case at the direction of the Symyx board. Projections covered unlevered after-tax free cash flows from April 1, 2010 through December 31, 2014 (calendarized), plus CY2015 Dow royalties for Symyx and Accelrys NOL carryforwards utilized in CY2015-2028. EBITDA figures excluded stock-based compensation expense; no specific revenue or EBITDA dollar amounts were disclosed in the summarized sections.
Process notes
Other Digital / HealthTech fairness opinions
- HealthGrades / Vestar Capital Partners 2010 · 17.0x EV/EBITDA
- Eclipsys / Allscripts-Misys Healthcare Solutions 2010 · 14.9x EV/EBITDA
- Phase Forward / Oracle 2010 · 11.6x EV/EBITDA
- Greenway Medical Technologies / Vista Equity Partners 2013 · 33.9x EV/EBITDA
- Accelrys / Dassault Systèmes SA 2014 · 16.3x EV/EBITDA
- Merge Healthcare / IBM Watson Health 2015 · 19.5x EV/EBITDA