October 21, 2015 / 2:01 PM / in 2 years

Silver Lake, Thoma Bravo to take SolarWinds private in $4.5 billion deal

(Reuters) - SolarWinds Inc said on Wednesday it agreed to be taken private by investment firms Silver Lake Partners and Thoma Bravo LLC for $4.5 billion, joining a growing list of enterprise software makers going private.

SolarWinds earlier this month said it was exploring strategic alternatives after Reuters reported that the company was in talks to sell itself.

Based in Austin, Texas, SolarWinds provides IT infrastructure management software to small businesses, government agencies and educational institutions worldwide.

The company said in July that it faced challenges in its licensing business and also cut its annual revenue forecast.

Silver Lake and Thoma Bravo’s $60.10 per share offer represents a premium of 19.7 percent to SolarWinds’ Tuesday close.

SolarWinds’ shares were up 16.51 percent at $58.57 in afternoon trading, the top percentage gainer on the New York Stock Exchange. They rose to a more than two-year high of $58.76 earlier.

Up to Tuesday’s close, the shares had risen about 20 percent since Oct. 9, when Reuters reported that SolarWinds was in talks to sell itself.

“Financially speaking, we view this as a good price that was on the high end of our initial expectations...,” FBR Capital Markets analyst Daniel Ives wrote in a note.

Co-founder Don Yonce, a former Wal-Mart Stores Inc executive, is the biggest investor in SolarWinds with a 12.7 percent stake, according to Thomson Reuters data.

The deal is expected to close in the first quarter of 2016, the company said.

Silver Lake and Thoma Bravo have secured debt financing from Goldman Sachs Bank USA to fund the deal.

SolarWinds said it will have to pay $159 million to Silver Lake and Thoma Bravo if it terminates the deal.

Silver Lake and Thoma Bravo will have to pay $317.9 million if they terminate the deal.

There has been a flurry of enterprise software companies going private in the last few years, including Informatica Corp, Tibco Software, Compuware and BMC Software.

J.P. Morgan Securities LLC is advising SolarWinds, while DLA Piper LLP (US) is its legal adviser.

Kirkland & Ellis LLP is the legal adviser to Thoma Bravo, while Ropes & Gray LLP is Silver Lake’s legal adviser.

Reporting by Kshitiz Goliya in Bengaluru; Editing by Don Sebastian and Sriraj Kalluvila

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