A Battered Stock, a Bargain Buyout, and the Identity-Software Sector Gets a New Look

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Enterprise-software stocks have been beleaguered of late. But depressed valuations lure bargain-conscious private-equity buyers. On Wednesday, Ping Identity,
which sells identity-security software, announced a deal to be acquired by Thoma Bravo for $28.50 a share, or $2.8 billion. Ping went public at $15 a share in September 2019 and sold for an eye-popping 63% premium to Tuesday’s closing price.

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Thoma Bravo has been a busy shopper. In June, the firm bought Anaplan for $10.4 billion in cash; in May, it paid $2.6 billion for payments-tech company Bottomline Technologies; and in April, it agreed to buy SailPoint Technologies,
which also sells identity software, for $6.9 billion. BTIG Holdings analyst Gray Powell notes that Thoma Bravo is paying about 6.5 times expected 2023 sales. Okta,
a Ping rival, trades for 6.8 times, while ForgeRock,
another peer, for 5.8. The SailPoint deal, Powell adds, was priced at just over 10 times 2023 sales.

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Powell says Ping’s term-license business model “has consistently created confusion in results and causes a higher degree of headline risk,” which leads him to believe no other bidder will emerge. Raymond James analyst Adam Tindle sees synergies between Ping and Thoma Bravo’s pending SailPoint deal.

The Ping deal had collateral effects: Okta, a pandemic darling that has struggled, rose 7.8% to $105.52, while ForgeRock, which went public in 2021 at $25 a share, jumped 8.8% to $23.65. By Friday, Ping shares traded just under the deal price at $27.92. Okta is still down 53% for the year, and ForgeRock is off 11%.

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Write to Eric J. Savitz at [email protected]

Last Week

Your Basic Draw

Stocks wavered over Taiwan tensions, fell after Federal Reserve officials reiterated hawkish sentiments, then rose on earnings. New jobless claims came in at 260,000, as expected; new jobs were a blowout, at 528,000. On the week, the Dow Jones Industrial Average was off 0.13% to 32,803.47; the S&P 500 edged up 0.36% to 4145.19; and the Nasdaq Composite rose 2.15% to 12,657.55.

The Earnings Beat

As a busy earnings week began, Goldman Sachs said 52% of companies had beaten, above expectations but below the last five quarters. Devon Energy led the shale-energy crowd with soaring profits and revenue. Big-oil BP posted its best profits in 14 years. KKR took a loss, blaming market volatility. Robinhood Markets lost $295 million and cut its workforce by 23%, and Airbnb missed. Starbucks and CVS Health beat, Uber Technologies reported its first positive quarterly cash flow, and Moderna and PayPal beat and stocks rallied.

Pelosi in Taiwan

House Speaker Nancy Pelosi and a delegation of lawmakers visited Taiwan, despite rising tensions over the trip between the US and China. After Pelosi left Taipei, China began live-fire drills off the coast, boycotted some Taiwanese products, and halted military and climate talks. Separately, a US drone strike killed al-Queda leader Ayman al Zawahiri, 71, on a balcony in Kabul, Afghanistan.

Senate in Action

The Senate passed a bill it had rejected a week earlier providing funds for Afghan war veterans exposed to burn pits. Democrats dropped a curb on carried interest in the tax and climate bill to get Arizona Sen. Kyrsten Sinema’s backing. And Kansas voters defeated a referendum to ban abortion in the state.

Getting the Grain Out

A ship carrying 26,000 tons of corn left Odessa for Lebanon—the first in a deal with Russia over grain shipments. Ukraine pressed its counteroffensive against Kherson as Russia continued to prepare to annex the region. A Russian court sentences WNBA star Brittney Griner to nine years on drug charges.

Annals of Deal Making

The Justice Department tried to block two deals in separate trials at the same Washington, DC, courthouse: the $2.2 billion merger of Bertelesmann’s Penguin Random House and Paramount Global‘s
Simon & Schuster, and UnitedHealth Group‘s
$8 billion deal for Change Healthcare …Global Payments said it would acquire EVO Payments for an enterprise value of $4 billion… Toronto-Dominion Bank agreed to acquire investment bank Cowen for $1 billion…The Wall Street Journal reported cosmetic giant Estée Lauder was in talks to buy luxury brand Tom Ford…An Apollo Global Management -led group agreed to buy airfreight company Atlas Air Worldwide for $3.2 billion…Thoma Bravo said it was taking Ping Identity private for $2.8 billion…Amazon.com said it was vacuuming up iRobot for $1.65 billion.

Write to Robert Teitelman at [email protected]

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Credit: www.marketwatch.com /

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