Doing the merger math at SonicWALL…

On July 23, shareholders of SonicWALL, Inc. (SNWL) will decide whether to let their company be acquired by PSM Holdings 2, Inc.

If the deal is approved, shareholders will get $11.50 cash (with no interest) for each share, minus any applicable taxes. In the merger proxy that the company filed June 22, the filing explained that the price —represents a premium of approximately 28% to the closing price of the Company’s common stock on June 2, 2010, the last trading day prior to the public announcement of the execution of the Merger Agreement.

As is usually the case, though, the filing discloses that certain of the officers and directors have ——interests in the transaction that are different from, or in addition to, the interests of our shareholders generally.

Like the shareholders, the officers and directors will sell their stock if the merger occurs. The proxy indicates that the aggregate value of their shares will bring in about $2,580,301.

The bigger stakes relate to past equity compensation awards. For example, if and when the merger closes, the outstanding stock options (which give their owners the right to buy 6,840,804 shares of common stock) will be cancelled and converted into cash. The filing notes:

—The aggregate value of all options outstanding as of June 1, 2010, that are or will become vested and converted in connection with the merger will be approximately $31,493,153 with respect to our executive officers and approximately $3,351,914 with respect to our non-employee directors.

The lion’s share of that amount — about $20.24 million — will go to President/CEO Matthew Medeiros. Another $5.35 million will go to VP/CFO Robert Selvi, more than $3.44 million will go to VP of Worldwide Sales Marvin Blough, and $1.52 million will go to VP, Finance/Corporate Controller/CAO Robert Knauff. The remaining $4.27 million will be shared by nine other officers and directors.

There are also 52,500 common stock RSUs held by some of the current non-employee directors. Those vested fully on June 11, 2010 —without regard to the merger. Assuming the merger occurs, the RSUs will be cancelled and converted to the right to receive cash, minus taxes. When cashed out, the directors who own them will get $603,750.

We—ll leave it to the analysts and shareholders to decide whether this proposed deal is a good one or not. But we suspect that the executives keep their calculators busy during these kinds of merger discussions.

Image source: Horia Varlan via Flickr


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