Bain Capital LLC and Golden Gate Capital have agreed to acquire BMC Software, a struggling technology provider that failed to find a buyer last year, for $6.9 billion in the third-largest private-equity deal of 2013. The buyout investors, which also include GIC Special Investments Pte and Insight Venture Partners, agreed to pay $46.25 a share in cash, BMC said.
BMC makes software that manages corporate computer networks. BMC Software Europe is based in Sandyford in Dublin and had a turnover of €257.5 million in the year to March 2011, according to Top1000.ie. It employs about 90 staff.
BMC held talks last year with buyout firms amid pressure from activist investor Elliott Associates LP, its second largest shareholder, before deciding to do a $1 billion stock repurchase instead. While Elliott was pushing for a higher price, BMC’s struggle to expand in software and services delivered over the Internet made a richer offer unlikely, according to Joel Fishbein at Lazard Capital Markets. “We thought the price at most was going to be $48,” Fishbein said. “They got the lower end because buyers saw the deterioration of the company.”
Shares of BMC fell less than 1 per cent to $45.40 shortly after midday in New York. The software maker had a market value of about $6.5 billion as of May 3rd. Cash Flow BMC sells software that manages fleets of computer servers and mainframes, configuring new machines and applying updates to older ones.
One of BMC’s business units makes software for managing server networks and the other is focused on mainframe products. “The deal makes sense given how much cash flow the company can manage from its mainframe operations,” said Kirk Materne at Evercore Partners. Bain is paying about nine times BMC’s projected 2014 cash flow, which Materne estimates will be $774 million. – (Bloomberg)
