Nearmap soars on talk of $1.1bn takeover bid from Thoma Bravo
Its CEO describes it as the ‘Netflix of the real world’ and this mapping company could command a valuation of over $1bn if a deal with private equity goes ahead.
Shares in aerial mapping provider Nearmap soared by nearly 25 per cent on Monday after the company revealed it is mulling a $1.06bn takeover proposal from US private equity giant Thoma Bravo, with the companies in advanced due diligence.
Executives at Nearmap, which is set to release its annual results on Wednesday, declined to comment but the company said in a statement to investors that it had received interest from other US-based potential suitors, though none have come close to Thoma Bravo’s $2.10 per share offer, which places a 39 per cent premium on Nearmap’s closing share price last Friday, and a 67 per cent premium to its six-month volume-weighted average price.
Nearmap has now granted exclusivity to Thoma Bravo for seven days, with obligations that prevent Nearmap from soliciting rival bids, while the company has also agreed to pay a break fee of up to $US3m ($4.23m). The deal would be subject to approvals from both the Foreign Investment Review Board and US regulators.
Just this month Thoma Bravo, one of the world’s largest private equity firms, announced it would buy enterprise identity management firm Ping Identity and take it private in an all-cash deal worth $US2.8bn, with private equity firms increasingly on the hunt for tech bargains with valuations under pressure across the sector. Nearmap’s shares were down by about 28 per cent in the past 12 months before Monday’s news.
The bid comes amid a period of high demand for high-resolution aerial imagery provided by the likes of Nearmap, along with rivals including EagleView, which is the market leader in the US.
Nearmap, which was founded in 2007 and claims second place in the US aerial imagery market, flies multiple planes every day across Australia, the US, Canada and New Zealand. They capture high-resolution aerial imagery that is then stitched together with software and uploaded to provide up-to-date maps for businesses including construction firms and local councils.
Thoma Bravo was an unsuccessful underbidder on EagleView seven years ago, and Nearmap is currently embroiled in a legal dispute with EagleView and another US rival, Pictometry, over claims of patent infringement.
EagleView and Pictometry claimed that Nearmap’s roof measurement technology used to help determine the outcome of insurance claims violates their patents. Nearmap has described those allegations as “meritless” and has vowed to vigorously defend the legal proceedings, which have been ongoing since 2021.
“Although the strategy behind those claims is to slow us down, that’s actually not happening at all,” Nearmap chief executive Rob Newman told The Australian in an interview last year. “Our businesses are not impacted by that case. In terms of the legal process itself, these things take time, we’ve begun our defence and I’m very confident that these claims against us are all without merit.
Analysts welcomed Thoma Bravo’s overture and said Nearmap was in a strong position to be able to maximise a sale price.
“The announcement is positive on a number of fronts,” RBC Capital Markets analyst Garry Sherriff said in a research note.
“The seven-day exclusivity beginning today to Thoma Bravo provides the bidder the opportunity for due diligence and pressure to provide a potential binding offer; it alerts other potential bidders that Nearmap is in play; and if no binding offer is proposed within the seven-day exclusivity, then the board, in our view, is likely to run a full sales process to flush out other potential offers and maximise a sale price.”
The move also comes after Nearmap was attacked earlier last year by activist researchers at J Capital, who alleged Nearmap had been hiding poor performance in the US market. “It seemed kind of slapped together on short notice to be honest,” Dr Newman said in an interview last year of J Capital’s report.
The company expects annual contract value of $159.9m, which is at the top of guidance. Its shares rose 24.8 per cent to $1.885.
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