Publicly traded Lionbridge Technologies today announced an agreement to be acquired by private equity firm H.I.G. Capital in a deal valued at $360 million.
Under the terms of the agreement, Lionbridge shareholders will receive $5.75 for each share of Lionbridge common stock.
Waltham, Mass.-based Lionbridge is a provider of globalization services to technology companies with more than 6,000 employees worldwide, according to its most recent annual report.
The company serves more than 800 customers via its technology platforms and global base of more than 100,000 contract translators. Lionbridge’s customers include Microsoft, Google, Rolls-Royce, The Gap, HTC and John Deere.
H.I.G. Capital is a global private equity investment firm with $21 billion of equity capital under management.
Lionbridge expects the transaction to be completed in the first quarter of 2017, subject to shareholder approval and customary regulatory approvals.
Fewer Investors to Answer
In a statement to employees today on the company intranet (and shared with the US Securities and Exchange Commission), Lionbridge CEO and founder Rory Cowan said the deal will have little effect on day-to-day operations beyond reducing the number of investors in the company.
"Rather than having multiple investors, we will have a single investor. We’ll no longer be in the public markets. We plan to operate substantially as we do today. There will be very few changes. I will remain as CEO and management, of course, will remain in place," he noted.
Early in in the company's development, Cowan added, "public markets offered us the greatest opportunity and the greatest flexibility to achieve our goals. Today, private equity seems to be far more flexible and provides more aggressive sources of growth capital for our needs."
In a related memo to employees, also filed with the SEC, company executives said they believe that being a private company will offer many benefits, including more resources to invest in technologies, applications and services and well as "independence to focus all of our attention on delighting clients without the distraction and cost associated with being a public company" and "freedom to focus on the long-term success of our business rather than managing for each quarter."
Pressure to Grow
Cowan has been pressured to grow the company, largely by two hedge funds, Glenhill Advisors and Glen Capital Partners, which collectively own more than 20 percent of Lionbridge. In 2015, Lionbridge generated a revenue of approximately $559.98 million, up from $490.61 million in 2014.
In June, Cowan oversaw a reorganization that saw Lionbridge move from a centralized model, managed along functional lines, toward individual business units aligned by vertical or geography and appointed nine General Managers to lead the new business units. "Functional orgs just don't scale," Cowen said during a quarterly conference call in August.
Financial results so far this year have been relatively flat. For the first nine months of 2016, the company reported revenues of $415.8 million, down from $419.1 million in the same period in 2015. In the third quarter, the company posted $135.2 million in revenues, down slightly from $138.6 million in for the same period in 2015.