
Potentia makes improved buyout offer for Australia's Nitro

Potentia Capital has submitted a new bid for Nitro Software that values the listed Australian business at approximately AUD 532.3m and eclipses a competing offer from a strategic investor.
The private equity firm is willing to buy all outstanding shares for AUD 2.17 apiece in cash, a significant improvement on its previous bid of AUD 2.00 per share. Nitro shareholders may opt for a full cash payout or receive 25%, 50%, 75%, or 100% of the value in the form of shares in the acquisition vehicle, according to a filing.
Moreover, the offer price will rise to AUD 2.20 per share if Potentia obtains an interest in at least 75% of the total outstanding shares. It will hit AUD 2.25 per share if the 75% threshold is crossed and existing shareholders in aggregate choose to receive at least 25% of the proceeds as shares in the acquisition vehicle.
The Nitro board declared Potentia’s offer to be superior to the AUD 2.15 per share proposed by Alludo, a Canada-based software provider owned by KKR. Formal endorsement of the offer is expected by March 2. Potentia has said it will make no further improvements to the offer.
The private equity firm submitted a bid of AUD 1.58 per share last August, and after this was rejected, it returned with an unsolicited off-market takeover bid of AUD 1.80 per share. Alludo entered the fray around the same time, offering AUD 2.00 per share.
There followed a tit-for-tat exchange as the price moved higher and the competing parties picked holes in one another’s proposals. On two occasions, Potentia appealed to Australia’s Takeovers Panel to intervene, claiming that Nitro’s board was effectively trying to push through the Alludo deal without giving due consideration to competing proposals.
Alludo’s most recent bid of AUD 2.15 per share presented shareholders with a choice: a 100% sale through a scheme of arrangement or an off-market takeover that would give Alludo at least 50.1%. The scheme of arrangement was voted down largely because Potentia has a 19.8% blocking stake.
The private equity firm was invited to perform due diligence on Nitro after indicating it was willing to pay AUD 2.20-AUD 2.30 per share.
Potentia has AUD 430m in equity available for the transaction, including AUD 209m in undrawn commitments from its first fund and capital from its second fund, which closed last June on AUD 635m. HarbourVest Partners, identified as a co-investor when Potentia first moved for Nitro in August 2022, has agreed to put in AUD 185m.
The private equity firm has an additional AUD 36m at its disposal from Aware Super, a local superannuation fund, and L Capital, a specialist co-investor based in San Francisco. This is the remainder of a AUD 112m pool earmarked for co-investment alongside Funds I and II.
Nitro claims to be one of only two software companies globally with a proven enterprise-grade software-as-a-service (SaaS) PDF productivity and e-signing platform. It has more than 2.8m licensed users and over 13,000 business customers in 155 countries. Customers include two-thirds of the Fortune 500.
Revenue reached USD 66.8m in the 12 months ended December 2022, up 31% year-on-year, while subscription revenue rose 50% to USD 50.6m. Operating EBITDA remained negative, although it narrowed from USD 18.6m to USD 11m. Annual recurring revenue rose 27% to USD 58.8m.
Nitro’s stock closed at AUD 2.19 on February 23. It was trading around the AUD 1.10 mark when Potentia first expressed interest in the asset.
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