What You Need To Know About Thoma Bravo's Acquisition Of Ellie Mae

Shares of Ellie Mae Inc ELLI soared more than 20 percent Tuesday after the cloud-based platform provider for the mortgage industry agreed to sell itself to private equity investment firm Thoma Bravo.

What Happened

Ellie Mae agreed to sell itself to Thoma Bravo for $3.7 billion, or $99 per share. The price tag implies a 47 percent premium to the 30-day average closing share price and 49 percent premium to the 60-day average closing price as of Feb. 1. On that day, media reports said the company may have hired bankers to explore a sale.

Why It's Important

Ellie Mae's mission to "automate everything automatable for the residential mortgage industry" will continue under Thoma Bravo's umbrella, company president and CEO Jonathan Corr said in the press release. The acquisition also offers investors "immediate value to our shareholders."

"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.

What's Next

Ellie Mae's board of directors unanimously approved the takeover offer and a 35-day "go-shop" period will commence which allows the company to actively engage in similar takeover discussions with other parties. Ellie Mae can terminate the existing deal with Thoma Bravo if a superior bid is presented although there is no guarantee this will occur and the board won't provide any updates unless required to do so.

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