BMC Software agreed to privatize itself in $6.9 billion sale to a group of investors led by Bain Capital and Golden Gate Capital. The deal pays $46.25 per share to the buyer’s group which includes the Government of Singapore Investment Corporation and Insight Venture Partners. That’s a 14 percent premium on BMC’s share price on May 11, 2012, the last business day before it was disclosed Elliott Management had taken a 9.6 percent share and was pushing for a sale.
“BMC believes the opportunity to become a private company will provide additional flexibility and position us to invest more strategically to drive powerful innovation and deliver cutting edge customer solutions,” said Bob Beauchamp, chairman and chief executive officer at BMC. “We look forward to working closely with all parties to complete this transaction and enter into our next chapter of growth and industry leadership.”
The deal represents the largest “pure” leveraged buyout this year, Reuters reported.
Based in Houston, BMC creates software to help manage corporate software networks. The company has two main divisions. Its enterprise service management business counts for nearly two-thirds of the company revenue, networks, databases and storage. About 40 percent of its business comes from managing International Business Machines Corp.’s sizable mainframe computers. That division grows slowly, but offers a valuable asset that should prove profitable to the new owners. The company has had a difficult time staying ahead of rivals in the server software market as more companies rely on web delivered services.
“They’ve been out positioned by some of the growth companies out there,” Joel Fishbein, an analyst at Lazard Capital Markets, told Bloomberg. “The world’s changed from a technology perspective very dramatically, and they haven’t been able to keep up.”
The company’s revenue is expected to grow a mere 3 percent to $2.23 billion in the year ended March 31. The previous year, growth was 5 percent.
A number of buyout firms had expressed interest in the company during its auction process. Bain and Golden Gate aggressively began leading the deal last week.
“BMC is the only enterprise software vendor that can go from mainframe to mobile, with solutions that help IT drive real business innovation and optimize operations management and employee productivity,” said Ian Loring, managing director at Bain Capital.
BMC has 30 days to consider higher bids. The deal is expected to close later this year.