Smartsheet could see competing bids, though unlikely – analysts

Smartsheet (NYSE:SMAR) could see competing bids after agreeing to an $8.4 billion sale to private equity firms on Tuesday, though the original deal is likely to stand, according to analysts.

The collaboration software maker agreed on Tuesday to a $56.50 a share sale to Vista Equity Partners and Blackstone (BX). The deal has a 45-day “go shop” period where Smartsheet (SMAR) can solicit alternative bids that’s set to expire Nov. 8.

“While we believe the acquisition was well shopped prior to the announcement and that this deal is the most likely outcome for Smartsheet, at just over 6 times our 2025 revenue estimate for a control premium on a desirable asset with nice margin potential and a sticky enterprise customer base, we would not rule out the possibility of a higher bid,” William Blair analyst Jake Roberge wrote in a note on Tuesday. He downgraded SMAR to market perform.

Amazon (AMZN), Google (GOOGL), Zoom (ZM) and Oracle (ORCL) are strategic buyers that may make sense for Smartsheet (SMAR), according to Roberge. Tech-focused PE firm Thoma Bravo also has several portfolio companies that would “fit nicely” under the Smartsheet platform. Antitrust issues wouldn’t likely be a concern if a strategic bidder were to make an offer.

Jefferies analyst Brent Thill wrote that he doesn’t see a high probability of another bid and said the Smartsheet (SMAR) deal valuation is in line with software M&A this year. The deal price is around 7x NTM EV/S and 6.5x CY25 EV/S, which is slightly above 5.7x NTM average for software PE deals this year and slightly below all software M&A YTD of 7.1x, both excluding SMAR. Thill also cut Smartsheet (SMAR) to hold.

BMO analyst Keith Bachman agreed that another bid isn’t coming.

“While we don’t think the purchase price is aggressive, we nevertheless think another bid is unlikely,” Bachman, who also cut Smartsheet (SMAR) to market perform, wrote in a note on Wednesday.