Why Coupa Software Stock Popped Today

What happened

Shares of Coupa Software (COUP 26.82%) surged today on news that the company was being acquired by Thoma Bravo, a well-known private equity firm focused on owning software companies. 

As of 10:52 a.m. ET, the stock was up 26.7% to $78.69.

So what

In a press release this morning, Coupa said it had entered a definitive agreement to be acquired by Thoma Bravo for $8 billion in enterprise value, or $81 per share, in an all-cash deal. The price presents a 77% premium to Coupa’s closing price on Nov. 22, after which the stock surged on reports of a possible acquisition.

The discount between the buyout price and the stock’s current trading price indicates only a small amount of doubt among some investors that the deal will go through. 

Coupa specializes in business spend management software, or making sure that procurement and sourcing decisions are made as efficiently and profitably as possible.

Coupa CEO Rob Bernshteyn said in a press release: “For more than a decade, we’ve been building an incredible Business Spend Management Community and have proudly cemented our position as the market-leading platform in our category. We’re looking forward to partnering with Thoma Bravo and accelerating our vision to digitally transform the Office of the CFO.”

The company also reported third-quarter earnings results, saying that revenue grew 17% to $217 million, and it reported an adjusted free cash flow of $66 million, showing it’s highly profitable on a cash basis.

Now what

The deal has been approved unanimously by Coupa’s board of directors and is expected to close in the first half of 2023, pending approval of Coupa shareholders and regulators.

Like other software stocks, Coupa is still down sharply, roughly 75%, from its peak during the pandemic, but this looks to be the end of the road for the company as a publicly traded stock.