In the biggest leveraged buyout of 2015, big-data software vendor Informatica will be taken private by the Canadian Pension Plan Investment Board and private-equity firm Permira for $5.3 billion, the company announced on Tuesday (April 7).
Under the terms of the deal, Informatica stockholders will receive $48.75 per share in cash, more than 6 percent higher than stock’s $45.83 closing price on Monday. The stock rose this year after activist investor Elliott Management bought almost 10 percent of the company and pushed for a sale.
The transaction is expected to close by Q3 2015. Informatica’s board has already approved the buyout, but it’s still subject to shareholder and regulatory approvals as well as other customary closing conditions.
Informatica, which went public in 1999 after a 1993 launch, hit a share-price high of $61.15 in mid-2011, but since then the company has been shifting to cloud-based offerings and a software-as-a-service (SaaS) model, and saw some quarters when revenue in key business lines slipped, The Globe and Mail reported. “It was largely related to making a lot of changes in the sales force that needed to be done after 2012, but at some point you need to stop making those changes,” Informatica CFO Mike Berry said at a recent conference.
But in January, Informatica said its Q4 results showed annual revenue passed $1 billion for the first time.
That should be easier to maintain with the SaaS approach, which means customers don’t buy software licenses but make regular payments to rent software that runs on Informatica’s servers. Steady revenue should also be helped by the company’s shift to cloud-based processing, in which data is stored and accessed globally in networks run by third parties such as Amazon, Bloomberg reported.
The agreement to go private will improve the volume of leveraged buyouts this year, which — like the pace of venture-backed IPOs — slipped in Q1. A total of $37.1 billion in LBOs were done in Q1, down 32 percent from Q4 and down 3.4 percent from Q1 2014, according to data from Bloomberg.