Blackbaud Rejects Clearlake’s $71 Per Share Acquisition Offer

On March 27, Blackbaud BLKB rejected a buyout offer from Clearlake Capital (received on March 24) for $71 per share, representing a 23% premium to the closing price. Blackbaud stated that its board unanimously agreed that it significantly undervalues the company. This comes after Clearlake Capital first disclosed its ownership of Blackbaud shares in October 2022, as the investment firm holds an 18% stake and has been evaluating avenues for its future investments in the company.

In our view, $71 per share was a reasonable takeout offer for Blackbaud, with the premium falling within a fairly normal range we see for acquisition offers within the software space. We are maintaining our $66 fair value estimate for shares of Blackbaud for now. We see the spike in March 27′s trading as support for our valuation and also the possibility that another bidder steps in.

The recent news does not alter our view that the company will continue to benefit from long-standing customers necessitating a technology-first approach. We view margins as low but expanding and expect near-term headwinds from its public cloud migration, EVERFI integration, and recessionary pressure to eventually ease. While the current macro environment is challenging for the social good space, we have been pleased with the firm’s recent efforts to boost profitability through pricing actions, improved productivity, and headcount reductions.