BMC to go private in $6.9 billion deal led by Bain, Golden Gate

Mon May 6, 2013 6:12pm EDT
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By Sayantani Ghosh

(Reuters) - Business software maker BMC Software Inc, whose anemic growth has been a source of frustration for its largest shareholder, said it would be taken private by a group led by Bain Capital and Golden Gate Capital for about $6.9 billion.

Elliott Management, which owns 9.6 percent of BMC and had been pushing for a sale for more than a year, had argued that BMC's management was neglecting the huge opportunity to expand into the fast-growing cloud computing market.

"Going private will be very positive for them because it will enable them to make the changes that were necessary, that were much difficult when you are a public company," Lazard Capital Markets analyst Joel Fishbein said.

BMC has some catching up to do in a market now dominated by Inc and where Oracle Corp, SAP AG and Microsoft Corp are investing heavily.

BMC's revenue is expected to have grown just 3 percent in the year ended March 31 to $2.23 billion, after growth of just 5 percent the previous year. BMC reports fourth-quarter results on Tuesday.

The deal represents this year's largest "pure" leveraged buyout so far.

Michael Dell has teamed up with private equity firm Silver Lake to take Dell Inc private for $24.4 billion, yet that buyout firm accounts for only a quarter of the equity in the deal. Earlier this year, Warren Buffett agreed to buy ketchup maker Heinz for $23 billion with private equity firm 3G Capital being a minority investor.

In BMC, private equity saw a company with stable cash flows and a lot of potential to leverage. The company has net debt of just $151 million, according to Thomson Reuters data.   Continued...

BMC Software's Shamoun Murtza is shown in this undated handout photo provided by BMC Software May 6, 2013. Jon Simon/Feature Photo Service/BMC Software/Handout via Reuters