Business software company Informatica has agreed to be acquired by private equity firms Permira Funds and Canada Pension Plan Investment Board (CPPIB) for approximately $5.3bn, in what is being touted as the biggest leveraged buyout in the US this year.
As per a statement by the company, the two private firms will pay $48.75 per share in cash, which is about 6% above the company’s closing price Monday of $45.83, as cited in The Wall Street Journal.
Industry sources say that the deal would be the largest private buyout globally as well so far, outshining the more than $2.8bn Life Time Fitness Inc. deal inked in March.
Informatica shares already spiked earlier in the week in anticipation of a possible deal as rumours gained ground of the company working with bankers amid reports by Reuters of bids submission by Permira/CPPIB and a partnership of Thoma Bravo LLC and Ontario Teachers’ Pension Plan.
The news came soon after its competitor Tibco was taken private for $4.3bn in December by private equity firm Vista Equity Partners.
Activist hedge fund Elliott Management Corp. emerged as the "dark horse" of the deal, having disclosed an 8% stake in Informatica in January, with Jesse Cohn, head of U.S. equity activism supporting the deal wholeheartedly.
WSJ earlier reported Elliott as saying Informatica is "significantly undervalued" and that it had initiated talks with Informatica’s management and board regarding "steps to maximize shareholder value."
Elliott increased its stake in the latter to 9.4% in February amid rumours that Informatica is "actually trying to save itself from its clutches" after having failed to score a sale in January.
Informatica has a set of data integration software products offering transformation, replication, event processing, quality processing, masking, exchange between businesses, messaging, integration and warehousing. Western Union Co, Citrix Systems Inc., American Airlines Group Inc. and Bank of New York Mellon Corp. are among few of its customers.
Already approved by the company’s board, Informatica leveraged buyout is expected to be completed in either the second or third quarter, subject to various closing conditions.
Owing to huge cash flow, software companies are increasingly becoming the target of buyouts by overseas private equity companies in the US as international firms are not subject to the same regulatory pressure from the Treasury Department’s Office of the Comptroller of the Currency, or the Federal Reserve.