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Minority shareholder Glazer Capital LLC announced Wednesday its intention to vote against Squarespace Inc.'s proposed $6.9 billion buyout by private equity firm Permira, citing concerns over the fairness and transparency of the deal. The investment firm, which owns approximately 5.4% of Squarespace's common stock, expressed its opposition in an open letter to the company's board of directors, arguing that the proposed sale significantly undervalues Squarespace.

Concerns Over Deal Valuation and Process

Glazer Capital criticized the buyout, which offers $44 per share to Squarespace's minority shareholders, representing a 15% premium. In its letter, Glazer asserted that the merger consideration is "demonstrably inadequate" and accused Squarespace's founder and CEO, Anthony Casalena, of orchestrating a self-serving process to retain control over the company's future.

"Glazer Capital ... strongly believes that the merger consideration is demonstrably inadequate and is the product of a self-serving go-private process engineered by a founder-CEO that presently controls, and desires to retain control over, Squarespace's destiny," the letter stated.

Squarespace Shareholder Private Deal : Discrepancies in Fairness Opinion

Glazer also pointed out that two critical valuation analyses typically included in mergers and acquisitions fairness opinions were missing from the fairness opinion provided by Centerview Partners, which the board relied on when recommending the deal. These omissions included a premiums paid analysis and a precedent transaction analysis. In contrast, Permira's adviser, Goldman Sachs, conducted both analyses and, according to Glazer, found that Squarespace's shares could be valued much higher than $44.

Goldman Sachs' premium paid analysis suggested a value range between $49.30 and $50.87 per share, while precedent transactions indicated a range between $46.97 and $59.19 per share. Glazer questioned whether Centerview omitted these analyses because they would highlight the inadequacy of the merger price.

Squarespace Shareholder Private Deal : Allegations of a Flawed Sale Process

Further complicating the deal, Glazer Capital accused the sale process of being designed to unfairly benefit Permira and Casalena. The letter alleges that Casalena cultivated a relationship with Permira over two years, giving the private equity firm an unfair advantage over other potential bidders. Glazer argued that these interactions were not properly endorsed by Squarespace's board, casting doubt on the integrity of the sale process.

Glazer also highlighted concerns about the disclosure of material information regarding the sale of Squarespace's subsidiary, Tock LLC, to American Express for $400 million. According to the letter, Permira was the only bidder provided with details about this sale, which represents about 6% of the merger consideration. Glazer contends that other bidders were not given adequate disclosure during due diligence, further skewing the process in Permira's favor.

Next Steps and Shareholder Sentiment

Glazer Capital's announcement signals growing discontent among Squarespace's minority shareholders as the company moves forward with the proposed buyout. The firm has urged other shareholders to join in voting against the deal, emphasizing that the process and the price do not serve the best interests of all shareholders.

Squarespace has not yet responded to Glazer's claims. As the deal faces increasing scrutiny, the final outcome will depend on whether shareholders are swayed by these concerns ahead of the planned transaction.