Private equity firm tries again to acquire Embarcadero

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Will the second time be the charm for troubled data management vendor Embarcadero Technologies and private-equity investment firm Thoma Cressey Bravo?

Both parties terminated an earlier purchase agreement in December, but they announced Friday that they have once again reached a purchase accord.

This time around, Thoma Cressey Bravo has valued Embarcadero at around $200 million or $7.20 per share as compared with the $234 million it offered in September. The private-equity firm changed its name from Thoma Cressey Equity Partners in February.

Embarcadero is currently facing delisting from the Nasdaq exchange for failure to make filings in a timely manner. One holdup is an ongoing review of its practices around the granting of stock options to staff, which the firm expects to result in the restating of several quarters of financial results.

Embarcadero has been without a CEO since January when Stephen Wong retired. The software vendor is also facing a stockholder derivative lawsuit related to its stock options grants, which was filed Feb. 9 in the U.S. District Court for the Northern District of California.

A majority of Embarcadero's board of directors has approved the acquisition by Thoma Cressey and has recommended that the company's shareholders vote in favor of the transaction.

Subject to customary closing conditions, the acquisition is due to close during Embarcadero's second fiscal quarter. The company Friday also released some preliminary details about its first quarter which closed March 31, 2007. Embarcadero expects to report total revenue of between $13 million and $13.3 million down on the year-ago quarter's $14.5 million.

A stern critic of the termination of the first agreement between Embarcadero and Thoma Cressey welcomed the renewal of the purchase.

"Under private ownership, Embarcadero's relatively small size should become an asset vs. its being a liability in the public domain," Robert Chapman, managing director of Chapman Capital, said in a release.

Chapman Capital is the investment adviser to two investment funds which between them own 9.3% of Embarcadero.

Chapman made a filing with the U.S. Securities and Exchange Commission (SEC) last month demanding the software vendor re-enter negotiations with Thoma Cressey or entertain bids from other would-be purchasers.

The investment adviser also ended its push to replace most of Embarcadero's board of directors. The firm had previously sought a shake-up in the board, alleging that the majority of the members held little of the company's stock. "The Board, with no meaningful 'skin in the game,' shall not be allowed to 'play venture capitalist" with the hard-earned money of a shareholder base held hostage by weak corporate governance," Chapman said in a March release.

More than 12,000 global customers use Embarcadero's software which includes database tools ER/Studio, DBArtisan, Rapid SQL and Change Manager. The company was founded in 1993, employs around 300 staff, and has its headquarters in San Francisco, along with offices in Australia, Germany and the U.K. Its database tools compete with rival offerings from companies including BMC Software, CA, IBM and Quest Software.

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