Why Mindbody Is Skyrocketing

What happened

After announcing that it has accepted a buyout offer, shares of Mindbody (NASDAQ: MB), a fast-growing software-as-a-service business focused on the wellness industry, jumped 67% as of 10:10 a.m. EST on Monday.

So what

Mindbody announced that it has agreed to be acquired by Vista Equity Partners.

Here are the must-know details of the transaction:

  • The deal values Mindbody at $1.9 billion. That translates to a share price of $36.50.
  • The takeover bid represents a 68% premium over Friday's closing price.
  • The transaction will be made in cash.
  • The deal has been unanimously approved by Mindbody's board.
  • The takeover is expected to close in the first quarter of 2019.
  • Mindbody has 30 days to shop itself around for a better offer.

Here's the commentary that Mindbody's Co-founder and CEO Rick Stollmeyer shared with investors:

Traders are bidding up shares today in response to the news.

Now what

Vista Equity Partners has more than $44 billion in assets under management, so there's little doubt that the company will be able to afford the transaction.

Personally, this Mindbody shareholder isn't happy at all with today's buyout news. While the 68% premium is substantial, Mindbody's stock traded as high as $45.50 within the past year. That means some long-term shareholders won't even be made whole from this buyout.

What's more, the $1.9 billion share price values the stock at less than 8 times sales. That's a lower valuation than of some of Mindbody's peers, such as AppFolio, Q2 Holdings, and HubSpot, which trade for 11 times sales, 8.5 times sales, and 9 times sales, respectively.

My plan of action is to hang on to my shares for the next 30 days and cross my fingers that a better offer emerges.

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Brian Feroldi owns shares of AppFolio, HubSpot, Mindbody, and Q2 Holdings. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool owns shares of AppFolio and Q2 Holdings. The Motley Fool recommends Mindbody. The Motley Fool has a disclosure policy.