The U.S. Department of Justice isn't ready to give the green
light for Vista Equity Partners to acquire Cvent, even if the two companies are
ready to get going. As Cvent's annual conference wrapped in Las Vegas on June
30, so did the extended 30-day review period to clear the way for the merger.
Rather than signing off, the regulatory officials have requested more
information from the two companies.
Speaking to Business Travel News about the tech firm's pending
acquisition at the Cvent conference, Cvent CEO Reggie Aggarwal said it was
business as usual. "Everyone says that, but it really is," he said. "Look at the
number of open positions we have. Our R&D budget is the same, and we don't
expect to have any major changes. The whole reason they bought us is to
continue to grow. … Vista knows a lot about this space. Management is committed
to staying for the long term, and we're continuing to invest and grow."
A few early warning signs, though, hinted that the merger
might not move quickly through the regulatory process. According to Cvent's
June 9 U.S. Securities and Exchange Commission filing, on April 26, Cvent and
Vista made the filings required under the Hart-Scott-Rodino Antitrust Improvements
Act. These filings triggered a 30-day waiting period during which antitrust
regulators may request voluntary information from the merger parties to help their
analysis of the competitive effects of the transaction. These could include
supplier lists, strategic plans and the like. During this time, regulators also
may contact customers, competitors and suppliers about antitrust concerns.
On May 26, Vista voluntarily withdrew its HSR notification
and report form, and it refiled the form on May 31. This "pull-and-refile,"
as it's commonly called, restarted the 30-day review period. This extended
waiting period expired on June 30.
A common reason for a party to the merger to restart the
review period is to give regulators more time to review initial merger details
with the hope that they'll approve the tie-up without making a more in-depth "second
request" for information.
"[The pull-and-refile] likely means the DOJ has noticed
there could be an issue," one antitrust attorney told Business Travel News in late June, speaking on condition of
anonymity. "The next thing to look for is whether the DOJ issues a 'second
request' for more information from the companies."
That second request arrived on July 1.
"This really drags the deal out since it will take the companies
a few months to supply the DOJ with its requested information and then more
time for the DOJ to work through it all," the source told BTN via email on July 1. "This
could push the timing up against the termination date of October 17; however,
that date is extendable by either party to April 2017."
—Additional
reporting by Mary Ann McNulty