Lawyers from McKenna Long & Aldridge are helping two software companies ink a deal that could be worth $310 million.
David Brown led a team of McKenna lawyers representing Waterloo, Ontario-based Open Text Corp. in its agreement to make Austin, Texas-based Vignette Corp. a wholly-owned subsidiary. Brown said the deal is slated to close in the third quarter of this year.
Both are publicly traded companies. Open Text, which Brown said will finance the deal itself, had 2008 sales of $725 million and employs some 2,900 people. The company offers a wide array of technologies but is known for its enterprise content management—or ECM—products, which help businesses access and store the data they generate, such as invoices and other documents.
The much smaller Vignette, with sales of $169.5 million and 643 employees, offers what Brown calls a “subset” of the ECM market—Web site content management, which involves capturing, controlling and accessing information through companies’ Web sites. Vignette’s net income was negative in all of 2008 and the first quarter of 2009, and its stock has ranged from a low of about $5.70 to a high of nearly $14 over the past year, according to information on Google Finance. It closed at $12.32 on Tuesday.
According to Brown, Vignette shareholders still need to approve the deal with Open Text. If the deal goes through, he said, shareholders will receive $8 per share, plus 0.1447 of an Open Text common share for every Vignette share they own. This equals about $12.70, as of share prices earlier this month, and represents a significant premium over share prices prior to the announcement of the deal.
Brown said that about 10 McKenna attorneys—including partners Charles E. Wilson III and Frank S. Benjamin, as well as associates Clayton W. Coley, Allix J. Magaziner and Leah M. Singleton—from a variety of practice areas including intellectual property, corporate, mergers and acquisitions, securities and employment, helped staff the deal.
Lawyers from Wilson Sonsini Goodrich & Rosati represented Vignette. They include partner Brian K. Beard and associate Catherine D. Schnurr in the firm’s Austin, Texas, office, and partner Michael S. Ringler in the San Francisco office.
“As always with software companies in particular, there are very specific issues that each one has, so working through those issues can always be a challenge,” Brown said. “Intellectual property issues are always at the core of this.”
Brown said that although the deal market in general has been slow, McKenna’s transactional team has stayed busy and has not laid off any attorneys nor pared any summer associates from its roster—thanks to clients with sound financials taking advantage of what they see as a bargain hunter’s market.