ForgeRock (FORG) short, mcap=$1.73bn, price $20.15 vs $22.06

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.

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