Carbonite, Inc. (CARB) stated that it has received an unsolicited offer from j2 Global, Inc. (JCOM) to buy all outstanding shares of Carbonite for $15 each. The news cheered investors as Carbonite shares soared 22.8% following the announcement.
The offer price represents a premium of nearly 28% over Carbonite’s closing price the previous day. At the offer price, Carbonite’s valuation comes to around $366.4 million.
This is j2 Global’s second attempt to acquire the data storage firm, as the former had offered to buy Carbonite for $10.50 per share in 2012. The current offer price is 43% higher than j2’s first offer price for Carbonite. Back then, Carbonite had spurned the offer, confident that its own strategies would prove more productive and better enhance shareholder wealth.
However, in the last couple of years, the provider of online backup and recovery solutions has seen increasing commoditization of cloud-based storage services as tech giants — Google Inc. (GOOGL), Amazon.com Inc. (AMZN) and Microsoft — have established a foothold in the segment. On the other hand, the low-cost data-storage services market continues to be dominated by smaller, venture-backed competitors such as Dropbox and Box.
As such, it has not been able to translate its strategies into solid, profitable actions as well and as consistently as it would have hoped.
j2 Global, which provides internet cloud-based software for government agencies, digital media companies and other businesses, intends to integrate Carbonite’s operations in its Business Cloud Services Division and expand its portfolio of cloud-based data services with a focus on small businesses. The company has been on an acquisition spree lately and is chasing growth by buying a string of internet services firms, including Contactology Inc., Web24 Group and Critical Software Ltd.
Carbonite has been grappling with execution issues, intense competition and business challenges of late. The buyout makes sense for the firm as j2 Global’s scale will assist it in becoming more competitive and gaining traction in the online backup segment. Further, the deal promises immense cross-selling opportunities for Carbonite in the coming years.
Carbonite currently sports a Zacks Rank #1 (Strong Buy), while j2 Global holds a Zacks Rank #2 (Buy).
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