Perhaps Epiq Should Have Taken The Previous Offer

There are market rumors indicating Xerox and DTI have offered to acquire Epiq Systems Inc. (“Epiq” or the “Company”) for between $14 and $16 per share.  The high end of this range, $16 per share, represents a 36% premium to the trailing 30-day average share price leading up to these rumors.  This may look like a decent offer for shareholders but if you consider what happened eighteen months ago, shareholders should be disappointed. 

In August of 2014, P2 Capital, an activist hedge fund, offered to take the Company private for $20 per share.  If an offer of $16 per share does actually exist, this represents a 20% discount to P2’s offer.  While the 20% drop alone is notable, it is even more eye catching considering the Company has actually grown revenue and EBITDA 19% and 47%, respectively, since P2’s offer.  See the chart below to see how P2 Capital’s pervious offer compares to current rumored offers.

We don’t believe Epiq’s Board will accept $16 per share but we expect it would be much harder to say no this time around if a buyer steps up and offers $20 per share.