Enterprise software maker BMC Software, Inc. (BMC) agreed Monday to be taken private by a consortium led by private equity firms Bain Capital LLC and Golden Gate Capital for $46.25 per share in cash or about $6.9 billion. The group also includes Government of Singapore Investment Corp. Pvt. Ltd. and Insight Venture Partners.
The deal, which is expected to close later this year, has the unanimous approval of those directors present. However, the deal is subject to approval from BMC shareholders, regulatory approvals and other customary closing conditions.
"After a thorough review of strategic alternatives, the BMC board of directors is pleased to reach this agreement, which provides shareholders with immediate and substantial cash value, as well as a premium to our unaffected share price," BMC Chairman and CEO Bob Beauchamp said.
The offer price represents an attractive 11.5 percent premium over BMC's unaffected stock price of $41.49 on September 28, the day prior to revealing the potential sale of the company. It also represents a 1.8 percent premium over BMC's closing stock price of $45.42 on Friday.
Credit Suisse, RBC Capital Markets and Barclays have agreed to provide debt financing in connection with the deal, which has no financing condition associated with it.
Houston, Texas-based BMC is involved in software that helps IT departments run more efficiently by automating database and systems management tasks. BMC is the only enterprise software vendor that can provided solutions from mainframe to mobile.
"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," Beauchamp added.
BMC is said to have attracted interest from other private equity firms too, but Bain and Golden Gate have struck the deal for the company.
A successful deal would mark the end of a campaign by activist hedge fund Elliott Management to force BMC into a sale, citing under-performance and loss of shareholder value. Elliott, which currently holds a 9.6 percent stake in BMC, has agreed to vote its shares in favor of the proposed going private deal.
Jesse Cohn, portfolio manager, said, "Elliott applauds the BMC Software board and executive leadership for delivering this value-maximizing outcome for stockholders, which both contains a go-shop provision and reflects what we believe is a substantial premium to BMC's unaffected stock price."
Following tremendous pressure from Elliott, BMC in early October reportedly hired investment banker BofA Merrill Lynch to assist it with a strategic review. Elliott had then urged BMC to engage a second bank, Morgan Stanley (MS), for the strategic review, since the long-time banker had advised the company in its defense against the hedge fund.
The activist effort began in July 2012 when BMC resolved a board nomination tiff with Elliott and agreed to increase its board size to twelve directors, while Elliott withdrew its notice of nomination of all of its director candidates.
A deal for BMC is one of the largest leveraged buyouts so far in 2013 after Dell, Inc. (DELL) agreed in early February to be taken private in a $24.4 billion deal by its Founder, Chairman and CEO Michael Dell in partnership with private equity firm Silver Lake Partners.
In Monday's regular trading session, BMC is currently trading at $45.50, up $0.08 or 0.17% on a volume of 17.42 million shares. In the past 52-week period, the stock has been trading in a range of $35.48 to $47.98.
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