Business
Business software maker Informatica Corp said it would be bought for about $5.3 billion by private equity firms. The largest buyout of the year was announced on Tuesday, as Permira, a private equity firm, and the Canada Pension Plan Investment Board said they had agreed to acquire Informatica, reports the New York Times. The buyers will pay $48.75 in cash for each share of Informatica stock. Like many technology companies, Informatica is scrambling to adapt to a rapidly changing industry. The company has been focused on moving to subscription-based models and cloud services, and the buyers said the company would continue these initiatives under the new ownership.
The buyout represents a rare so-called club deal, involving more than one major private investment firm. Such deals were popular during the private equity boom before the financial crisis, but have since fallen out of favor. The deal also is another big move for the Canadian pension fund, which has emerged as one of the most active private investors in recent years, with investments in Neiman Marcus, Univision and other big companies. “After careful consideration and deliberation of strategic alternatives, our board of directors unanimously concluded that the sale of Informatica to the Permira funds and C.P.P.I.B. is in the best interest of all Informatica stakeholders,” Sohaib Abbasi, Informatica’s chairman and chief executive officer, said in a statement. “While delivering immediate compelling value to our shareholders, we remain committed to the long-term success of our customers, partners, and employees. Permira and C.P.P.I.B. share both our vision for Informatica to power the data-ready enterprise and our conviction in sustained long-term growth.”The Informatica board has approved the deal and is recommending shareholders vote for it. The deal is expected to close later this year.
Informatica helps companies integrate and analyze data from various sources, notes Reuters. It counts Western Union Co, Citrix Systems Inc, American Airlines Group Inc and Bank of New York Mellon Corp among its customers. Informatica competes with Tibco, which was taken private for $4.3 billion in December by private equity firm Vista Equity Partners. "Informatica ... is better positioned (than Tibco) to benefit from the adoption of cloud technologies," Mizuho Securities analyst Abhey Lamba wrote in a note on Monday. Redwood City, California-based Informatica's revenue rose 10.5 percent to $1.05 billion in 2014, while its pre-tax income jumped 21 percent to $170.3 million. However, analysts have said the company's shift to cloud and subscription revenue is pressuring margins.
