What happened Mortgage technology specialist Ellie Mae (NYSE:ELLI) has agreed to be acquired by Thoma Bravo, a private equity firm. As of 11:52 a.m. EST, shares of the company were up 21%. So what The acquisition is an all-cash transaction, and upon the closing of the deal, Ellie Mae shareholders will receive $99 in cash for each share of stock they own. This is a premium of about 21% to the previous day's close, after an already strong start to 2019, although it's still well below the 52-week high of $116.90. It may seem odd that the acquisition price of Ellie Mae is $99 per share and the stock spiked to slightly higher than $99 following the announcement. Generally speaking, acquisition targets in these situations will spike, but to a price somewhat lower than the buyout price in order to compensate for the regulatory risk that the deal won't get done. To be clear, this deal is subject to approval by Ellie Mae stockholders, as well as the approval of regulatory authorities. The reason for the extra boost in price is that the deal also includes a 35-day "go-shop" provision. Essentially, this means that Ellie Mae can actively solicit competing offers, and will have the right to terminate its agreement with Thoma Bravo if it can find a superior offer. In short, the shares are pricing in the chance that someone else will swoop in and offer even more for Ellie Mae. Now what The deal is expected to close during the second or third quarter of this year. Unless Ellie Mae receives a better offer within the next 35 days, there shouldn't be any major roadblocks to getting the deal done. Check out the latest earnings call transcripts for companies we cover.<doc-sep>WILMINGTON, Del.--(BUSINESS WIRE)--Rigrodsky & Long, P.A. : Do you own shares of Ellie Mae, Inc. (NYSE: ELLI )? Did you purchase any of your shares prior to February 12, 2019? Do you think the proposed buyout is fair? Do you want to discuss your rights? Rigrodsky & Long, P.A. announces that it is investigating potential legal claims against the board of directors of Ellie Mae, Inc. (“Ellie Mae” or the “Company”) (NYSE: ELLI) regarding possible breaches of fiduciary duties and other violations of law related to the Company’s entry into an agreement to be acquired by Thoma Bravo, LLC (“Thoma Bravo”) in a transaction valued at approximately $3.7 billion. Under the terms of the agreement, shareholders of Ellie Mae will receive $99.00 in cash for each share of Ellie Mae common stock. If you own common stock of Ellie Mae and purchased any shares before February 12, 2019, if you would like to learn more about this investigation, or if you have any questions concerning this announcement or your rights or interests, please contact Seth D. Rigrodsky or Gina M. Serra toll-free at (888) 969-4242, by e-mail at info@rl-legal.com, or at https://www.rigrodskylong.com/offices-contact. Rigrodsky & Long, P.A., with offices in Delaware, New York, and California, has recovered hundreds of millions of dollars on behalf of investors and achieved substantial corporate governance reforms in numerous cases nationwide, including federal securities fraud actions, shareholder class actions, and shareholder derivative actions. Attorney advertising. Prior results do not guarantee a similar outcome.<doc-sep>Shares of Ellie Mae surge after Thoma Bravo offers to buy the company in all-cash deal valued at $3.7 billion. Shares of software-as-a-service company Ellie Mae Inc. (ELLI) surged 21% Tuesday after private-equity firm Thoma Bravo LLC said it was buying the company in an all-cash deal valued at $3.7 billion. Elli Mae closed at $98.95 in Tuesday's trading on the New York Stock Exchange. Under terms of the agreement, Ellie Mae shareholders will receive $99 in cash a share, a 47% premium to the 30-day average closing share price and 49% premium to the 60-day average closing price as of Feb. 1, Thoma Bravo said in a statement. "Ellie Mae is leading the digital transformation of the residential mortgage industry, and we look forward to building on the company's successes and to our partnership through this next chapter of growth," said Holden Spaht, Thoma Bravo managing partner. The deal, which is expected to close in the second or third quarter, includes a 35 day "go-shop" period, under which Ellie Mae can seek superior bids. However, Elli's board of directors unanimously has approved the transaction. Ellie Mae processes some 35% of all U.S. mortgage applications. Its software streamlines and automates the process of originating and funding new mortgage loans, and facilitating regulatory compliance.<doc-sep>Ellie Mae's (NYSE:ELLI) Encompass software is ubiquitous in the mortgage industry, and the company's stock has been owned and recommended by Motley Fool portfolios. But it won't be anymore -- the mortgage industry software provider is going private. Shareholders will get a nice premium compared to the most recent values, though not relative to prices prior to the market's fourth-quarter sell-off. But, as Market Foolery host Mac Greer and senior analysts Andy Cross and Jason Moser discuss in this segment of the podcast, it's a strong company with dominance in its niche -- should investors hold on in case an even better offer appears? A full transcript follows the video. Check out the latest earnings call transcripts for companies we cover. This video was recorded on Feb. 12, 2019. Mac Greer: Ellie Mae be going private. Jason, you gave me that line. You guaranteed me that that line would work! And I'm not sure it did! Jason Moser: It made me laugh. Come on, listeners! Greer: So, Ellie Mae is a mortgage software provider. It's being acquired by private equity company Thoma Bravo in an all-cash deal at $3.7 billion. Jason, I know this is a company you follow. Shares of Ellie Mae up big today. What do you think? Moser: It is, it's one I was chatting with Simon Erickson back in Texas here earlier about, it's one that he and I covered on MDP, one we owned in MDP, owned for quite some time. It's not a shock to me to see this. Their Encompass lending platform is really strong. Chances are, if you've bought a home or refinanced your home, some of, if not most of those documents you've signed were generated from Ellie Mae's Encompass engine. They have a very good business there. Growing relationships with lenders, switching costs grow over time, pricing power comes from that. It's an attractive business. To put that into context, with MDP, this was a big winner. I recommended it as a Best Buy Now in MDP seven different times going all the way back to January 2016. It recorded absolute positive returns six of those seven times, market-beating five of those seven times. I personally have owned shares and have done very well with those as well. I'm sad to see it go. It's worth noting, there's a 35-day shop-around clause for Ellie Mae management. That means the board can go out there and at least look at other potential suitors if they feel like there's a better offer out there. Take that with a grain of salt -- $99 in cash is a pretty good offer for today. Greer: What does a shareholder do here? Do they go ahead and sell, or do they get greedy and wait? Moser: Far be it for me to advise shareholders what to do. I have the luxury of basically having to hang onto my shares anyway because we'll be talking about it for a while and our trading guidelines here tell me that I need to hang onto those shares until I shut up about it. I would not sit there and tell you that there will not be a competing offer. It's an attractive business. It generates a lot of cash. I can see a competing offer coming in. I think that right now, the state of the housing market is just uncertain enough where Ellie Mae management might feel like this is a good offer. Particularly, listen, they've got earnings coming out on Thursday, so they may drop a bombshell on Thursday that could make this offer look really nice. We just don't know. I think, unless you have a better place for that money, hanging onto those shares is probably the most level-headed way to go about things. It does sound like $99 in cash is going to be the worst-case scenario.<doc-sep>
Ellie Mae, the Pleasanton, California-headquartered fintech provider for the mortgage finance industry is being acquired by private equity investment firm, Thoma Bravo, LLC in an all-cash deal valued at around $3.7 billion. Under the terms of the agreement, all Ellie Mae shareholders will receive $99.00 in cash per share. The price per share represents a 47 percent premium to the 30-day average closing share price and a 49 percent premium to the 60-day average closing price as of February 1, 2019. While Ellie Mae will remain at its Pleasanton headquarters it will be run as a privately-held company. “As we enter this next phase of our digital mortgage journey, we are thrilled to provide immediate value to our shareholders. With the investment and support from Thoma Bravo, we will remain committed to our customers’ success, innovation and growth of the Encompass Digital Lending Platform while maintaining our position as the best place to work,” said Jonathon Corr, President and CEO of Ellie Mae. The transaction is expected to close in the second or third quarter of 2019 and is not subject to a financial condition. Ellie Mae said that its Board of Directors unanimously approved the definitive agreement and recommended that stockholders vote their shares in favor of the transaction. “Ellie Mae delivers powerful and innovative mortgage technology solutions across every channel of the residential mortgage sector, enabling lenders to originate more loans while reducing costs and driving efficiency, quality, and compliance throughout the mortgage process,” said Holden Spaht, a Managing Partner at Thoma Bravo. “Ellie Mae is leading the digital transformation of the residential mortgage industry and we look forward to building on the company’s successes and to our partnership through this next chapter of growth.” The agreement includes a 35-day “go-shop” period, which permits Ellie Mae’s Board and advisors to actively initiate, solicit, encourage, and potentially enter negotiations with parties that make alternative acquisition proposals.