Murchinson Issues Letter to Fellow TaskUs Stockholders Detailing Opposition to the Pending Buyout Transaction

National Post

4 days ago

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Expresses Concern that the Transaction Price of $16.50 Per Share Significantly Undervalues TaskUs
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Contends the Deal Appears to Be the Result of a Flawed Process that Benefits the Company's Controlling Stockholders at the Expense of Minority Stockholders
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Stockholders Deserve Fair Value, Which Murchinson Believes to Be At Least $19.00 Per Share
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TORONTO — Murchinson Ltd. (collectively with the funds it advises and/or sub-advises, 'Murchinson' or 'we'), a stockholder of the Class A common stock of TaskUs, Inc. (Nasdaq: TASK) ('TaskUs' or the 'Company'), today issued an open letter to fellow stockholders regarding its opposition to the Company's proposed 'going-private' transaction (the 'Transaction') with an affiliate of Blackstone Inc., the Company's controlling stockholder, TaskUs Co-Founder and CEO Bryce Maddock and TaskUs Co-Founder and President Jaspar Weir (collectively, the 'Buyer Group').
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August 12, 2025
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Dear Fellow Stockholders,
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We are writing to you today to express our concern over the Buyer Group's proposed take-private transaction announced by TaskUs on May 9, 2025. Following our own analysis and review of the Company's proxy statement, filed with the SEC on August 8, 2025 (the 'Proxy Statement'), we believe there are two key troubling aspects of the Transaction that stockholders should be aware of before voting on the Transaction at the special meeting of stockholders to be held on September 10, 2025 (the 'Special Meeting'):
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The Transaction price of $16.50 per share drastically undervalues TaskUs, its future earnings power and growth trajectory.
The Transaction appears to be the result of a flawed process, including a fairness opinion influenced by conflicts of interest.
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In our view, the Transaction rewards the controlling stockholders at the direct expense of the Company's minority stockholders.
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We therefore intend to vote AGAINST this Transaction. It is our position that stockholders deserve fair value for the Company's shares, which we believe should be at least $19.00 per share.
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The Transaction Drastically Undervalues TaskUs, Its Future Earnings Power and
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Growth Trajectory
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TaskUs is a high-growth, cash-generating business and has built a differentiated, premium position as the go-to partner for many of the world's most innovative companies, including Meta, DoorDash, Uber, Coinbase and Netflix. We believe the Company is uniquely positioned at the intersection of several market tailwinds: (1) the proliferation of user-generated content online, which drives demand for moderation and safety, (2) AI development and deployment, (3) digital customer experience outsourcing, and (4) increased regulatory pressure for higher levels of online safety, privacy and moderation.
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These tailwinds are structural drivers that we believe should support sustained high single-digit to double-digit revenue growth for the foreseeable future. The Company's recent performance clearly reflects this:
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The Company's earnings results for the first and second quarters indicate its business is inflecting. In the second quarter, the Company's revenue growth accelerated to 23.6% year-over-year, with every geography delivering double-digit growth.
In the second quarter, the AI Operations segment achieved year-over-year revenue growth of 72.2% and sequential growth of 15.4%, demonstrating substantial momentum and no indication of a slowdown.
Additionally, SG&A expense margin decreased by approximately 40 basis points year-over-year, while Adjusted EBITDA margin improved by approximately 70 basis points year-over-year.
This year alone, the Company is projected to generate between $75 million to $120 million of free cash flow. According to the Proxy Statement, TaskUs will also utilize $100 million to $200 million of its own cash to partially fund the Transaction, meaning that the Buyer Group will recoup most of its 'equity check' using free cash flow and be made whole in under a year, while the rest of the Company's stockholders give up their shares at what we believe to be a depressed valuation. In other words, the sum of the cash on hand as of June 30, 2025 and the FY2025 Adjusted Free Cash Flow guidance provided by the Company on February 26, 2025 is likely to exceed the cost of acquiring the outstanding shares not currently owned by the Buyer Group at the proposed acquisition price of $16.50 per share.
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Interestingly, the Company's Proxy Statement attempts to justify the Transaction by painting a gloomy picture of TaskUs' future in the age of AI. The Buyer Group claimed that adapting to rapid advancements in AI, ' was [not] possible to successfully pursue … as a public company.' However, this justification does not hold up. With the Buyer Group effectively controlling the Company, TaskUs' Board of Directors (the 'Board') has leeway to weather uncertainty and carry out the implementation of the AI strategy as a public company.
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Further, the notion that the pivot to AI cannot be executed as a public company is undermined by the Proxy Statement itself. In forming the fairness opinion, an important factor was ' advancements in AI and increased adoption of AI by the Company's competitors.' This not only affirms that the pivot to AI is indeed possible for public companies in TaskUs' industry but also indicates that TaskUs would not fare any worse than its competitors who are already pursuing the same strategy.
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In closing, TaskUs is not a distressed business and should therefore not be selling itself at a discount to its base case valuation. The Company is on track to significantly exceed its FY2025 Adjusted EBITDA guidance. 1 As such, selling a company with TaskUs' operational performance, cash flow and growth trajectory for less than 7.0x EV/2025E EBITDA, which is well below the Company's three-year trading average of ~8.0x, is unacceptable. By contrast, assuming an 8.0x base case multiple on FY2025E Adjusted EBITDA, the takeout price should be a minimum of ~$19.00 per share, reflecting the Company's true fair value before any control premium is even added to the purchase price.
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The Transaction Appears to Be the Result of Flawed Process and Fairness Opinion
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Once the Company and the controlling stockholders began deal negotiations, the controlling stockholders effectively blocked the Company from exploring any alternatives that could have delivered a higher price for minority stockholders. This is evident in the Proxy Statement:
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'Blackstone stated that it would not consider potential alternative opportunities involving a sale of Company securities by Blackstone to a third party or entertaining bids for assets held by the Company. In addition, Mr. Maddock stated that he and Mr. Weir were only interested in working with Blackstone and were not open to working with an alternative financial sponsor.'
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This closed-door approach essentially deprived stockholders of a fair, competitive process. Additionally, the fairness opinion that was prepared by Evercore likely relied on information and projections provided by 'Company management' – Messrs. Maddock and Weir – who stand to benefit most as controlling stockholders and as members of the Buyer Group (as well as other executives who, we assume, will likely continue to work under them after the Transaction is completed). In other words, Evercore likely relied on representations made by members of the Buyer Group in preparing an opinion meant to objectively judge the fairness the Buyer Group's proposal.
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Further, we find it concerning that the Company appeared to have deliberately timed the Transaction announcement to suppress the stock's fair value. According to the Proxy Statement, on April 21, 2025, management was aware that first quarter earnings results would beat analyst expectations – yet the Buyer Group pushed to finalize and announce the Transaction before the market could absorb that positive news. 2 As a result, the Buyer Group secured a takeover price that does not reflect the potential market reaction to TaskUs' strong first quarter performance, exceeding consensus estimates for revenue and Adjusted EBITDA. We question why the Company would not leverage this positive news to extract a higher buyout price that would have benefitted the Company's minority stockholders.
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Additionally, we find the timing of share repurchases disclosed in the Company's 10-Q filings for the first and second quarters to be highly suspect. The Company did not repurchase any shares in January or February of 2025. However, in March 2025, the Company repurchased over 750,000 shares, and in April 2025, the Company repurchased ~1.2 million shares, totalling approximately $25 million in share repurchases. 3 According to our analysis, these repurchases reduced the effective price paid by the Buyer Group to $16.14.
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The timing of these repurchases – coinciding with ongoing negotiations between the Company and the Buyer Group – raises questions about whether the controlling stockholders were attempting to minimize the number of shares not owned by the Buyer Group by using the Company's own cash reserves. A review of the Company's quarterly reports from 2024 reveals a similar pattern: when the Buyer Group was reportedly contemplating a transaction to buy the Company in the second quarter of 2024, the Company repurchased shares in the market at disproportionately greater quantities relative to other months.
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Minority Stockholders: Our Vote Counts
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Despite owning over 97% of the Company's voting power through its Class B voting shares, the controlling stockholders need the approval of a majority of the shares they do not own to get the Transaction done ('Majority of the Minority Vote').
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It is our opinion that the current offer price does not reflect the Company's future earnings power and growth trajectory – and we believe Messrs. Maddock and Weir, who built TaskUs, know this better than anyone. That is why we intend to vote AGAINST this Transaction at the Special Meeting and demand that the Company fulfill its obligations to all stockholders to pursue a value-maximizing deal that would, at the very least, result in fair value for the Company's shares.
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We encourage fellow stockholders to make their views on the Transaction known to the Board. If the Board hears from enough stockholders with concerns, hopefully, it will reconsider selling a company with TaskUs' potential for such a discount.
Murchinson Ltd.
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Founded in 2012 and based in Toronto, Canada, Murchinson is an alternative asset management firm that serves institutional investors, family offices and qualified clients. The firm has extensive experience capturing the best returning opportunities across global markets. Murchinson's multi-strategy approach allows it to execute investments at all points in the market cycle with fluid allocation between strategies. Our team targets corporate action, distressed investing, private equity and structured finance situations, leveraging its broad market experience with a variety of specialized products and sophisticated hedging techniques to deliver alpha within a risk-averse mandate. Learn more at www.murchinsonltd.com.
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Cautionary Statement Regarding Forward-Looking Statements
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This press release contains forward-looking information within the meaning of applicable securities laws. In general, forward-looking information refers to disclosure about future conditions, courses of action, and events. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the use of any of the words 'anticipates', 'believes', 'expects', 'intends', 'plans', 'will', 'would', and similar expressions are intended to identify forward-looking statements. These statements are based on current expectations of Murchinson and currently available information. Forward-looking statements are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate. Murchinson undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities legislation.
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Disclaimer
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The information contained or referenced herein is for information purposes only in order to provide the views of Murchinson and the matters which Murchinson believes to be of concern to stockholders described herein. The information is not tailored to specific investment objectives, the financial situations, suitability, or particular need of any specific person(s) who may receive the information, and should not be taken as advice in considering the merits of any investment decision. The views expressed herein represent the views and opinions of Murchinson, whose opinions may change at any time and which are based on analyses of Murchinson and its advisors. In addition, the information contained herein is being publicly disclosed without prejudice and shall not be construed to prejudice any of Murchinson's rights, demands, grounds and/or remedies under any contract and/or law.
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1
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Based on the FY2025 Adjusted EBITDA guidance of $229.95 million to 236.25 million (calculated using the FY2025 guidance range for revenue of $1.095 to 1.125 billion and a ~21% Adjusted EBITDA margin, provided on February 26, 2025). Estimated FY2025 Adjusted EBITDA calculated using reported results for the first half of FY2025 (equates to a run rate of $124 million for Adjusted EBITDA). Given the business is not impacted by seasonality, we estimate FY2025 Adjusted EBITDA to be at least ~$248.5 million.
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2
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Note the sequence of events as detailed in the Proxy Statement: '
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On April 22, 2025, … Company management informed Evercore that the preliminary first quarter earnings results would slightly exceed analyst top- and bottom-line expectations…
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' On the same day, '
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The Buyer Group also told representatives of Evercore (i) that the Buyer Group would like to announce the Potential Transaction by May 8, 2025, which was the planned date for the Company to publicize its earnings results for the first quarter of 2025.
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'
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On May 1, 2025 ' Representatives of Evercore and the Special Committee discussed their view on how the market would likely perceive the Company's earnings results,' yet, on the following day, ' the Special Committee directed Cravath to tell the Company that the Special Committee was comfortable with the Company announcing an earnings date of May 12, 2025.' 3 Quarterly reports filed with the SEC on May 12, 2025 and August 7, 2025.
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