FORG short pitch:
– ForgeRock is to be acquired by Thoma Bravo at $23.25/share.
– Market is pricing too high a probability that the transaction will be successful.
– Regulatory risks seem too large to justify the 87% probability.
– Short thesis depends on how DOJ defines the sector FORG operates in.
– If defined narrowly – big risk of the deal getting blocked.
– If defined more broadly resulting in lower market concentration, the transaction is likely to be allowed.
FORG valuation:
– Unaffected FORG price was $14-15/share.
– Peer $OKTA multiple of 3.8x 2023 sales, implies downside price of $13.4/share.
Exp. gain: +30% to $14/share.
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/FORGEROCK_INC/0810269971