Private equity firm Permira has sealed the biggest private equity deal of the year so far with its takeover of Informatica. The deal is worth $5.3 billion and sees the firm team up with Canada’s Pension Plan Investment Board (CPPIB). Permira fought off competition by other private equity led consortiums.
The landmark deal
The deal means that the Informatica shareholders are going to receive $48.75 per share as part of the deal. The US based company, which connects software and enterprise services, is in competition with US company Tibco, which was also recently acquired by private equity. Vista Equity Partners bought the company in a $4.3 billion deal.
Sohaib Abbasi, chairman and CEO of Informatica, said in the official statement, “After careful consideration and deliberation of strategic alternatives, our board of directors unanimously concluded that the sale of Informatica to the Permira funds and CPPIB is in the best interest of all Informatica stakeholders.”
Permira’s partner and co-head of the technology sector team, Briand Ruder, said, “We are very excited about the Company’s ongoing transition to cloud and subscription based services, as well as its continued pursuit of four separate billion dollar market opportunities in cloud integration, master data management, data integration for next generation analytics, and data security. In addition, we look forward to working with this talented team of dedicated employees and CPPIB to grow the business and achieve Informatica’s highest potential. “
Pushed to Sell by a Minority Shareholder?
The Register suggested that Permira’s board might have listened to activist investor Elliott Management when it decided to sell. According to the article, the investor, which currently owns 9.4% of the shares, had asked for the company to go private a while back.
The Register writes that Elliott Management is on “a buy-out roll – its aggressive investing activities have it buying into companies, sometimes troubled ones, shaking up management with accusations that things could be better if changes were made, which can then prompt partial or total sell-offs.”
Private Equity Back to Buying Listed Companies
As well as being the biggest private equity deal of the year so far, the Informatica sale is also a sign that private equity firms are making a comeback in buying listed companies. Since the financial crash in 2008, firms have been reluctant to go after these deals. According to the Telegraph, this has been largely due to two reasons. First, firms have been wary of paying too much and secondly, the US changes in private equity law have made it more complicated to raise vast sums of bank debt for the transactions.
But appetite is now changing, especially in the field of technology. Permira and CPPIB were able to stall off competition by other private equity firms. A consortium led by Silver Lake Partners and Hellman & Friedman were among the potential buyers. Informatica has increased its market share in years and last year announced increase in profits. The deal will be finalised in the second or third quarter, as it is subject to regulatory approval.
In the meantime, you can find private equity deals at DealMarket.