Top Image Filing Reveals Kofax's Initial Offer Was Higher

The initial offer automation software supplier Kofax Inc. made for Nasdaq-listed content processing solutions company Top Image Systems Ltd. was much higher than the final agreed-upon $16 million, Top Image revealed in a Thursday filing to the U.S. Securities and Commission.

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In February, Israel-headquartered Top Image announced Kofax, an Irvine, California-based portfolio company of technology investment firm Thoma Bravo LLC, has agreed to pay its shareholders $0.86 per share for an aggregate consideration of $16.028 million. At the time of the announcement, the sum was a 65% premium on Top Image's volume weighted average price over the last 30 days.

Top Image's latest trading closed at $0.829.

Top Image, which develops document-based business processes automation software, reported revenues of $14 million and an operating loss of $2.6 million for the first six months of 2018, compared with $14.7 million and $3.1 million respectively in the same period last year.

According to Thursday's filing, submitted ahead of an extraordinary general shareholder meeting held Monday, the acquisition was first discussed in July 2017. Initially, Kofax made a non-binding offer of $1.65 to $1.85 per share for Top Image, pending certain pre-conditions and milestones.

In November 2017, that range was upped to $2.15 to $2.35 per share, but in December issues found in due diligence checks reduced Kofax's valuation for Top Image to $1.65 to $1.75 per share, according to the filing.

While the negotiations fizzled out for a time, with Top Image discussing a potential acquisition with a third party, in October 2018 Kofax made another non-binding offer, this time valuing the company at $40 million. In December, that number was again cut due to "business concerns," first to $1 per share and then to $0.6 per share for a 48% stake.

Kofax's final offer of $0.85 takes into account Top Image's working capital as well as its outstanding debt of almost $6 million, according to the filing.