A private-equity consortium led by Francisco Partners and TPG is set to buy off software provider New Relic as private ownership, offering shareholders $87 per share held – a premium of 17.5% to the stock’s closing price on Friday.
The announcement was made by New Relic on Monday. The company said it was valued at almost $6.5 billion.
New Relic shares spiked by 14% in pre-market trading, to over $84. The company said the offer was a 26% premium to New Relic’s 30-day volume-weighted average closing price.
According to the company report, the deal was expected to be concluded by early 2023. The deal will also return the company to private ownership after nearly nine years since it first traded on the New York Stock Exchange in 2014.
“We are pleased to partner with Francisco Partners and TPG, who are committed to continuing to build upon New Relic’s strong foundation and achieve its full potential,” New Relic founder and executive chairman Lew Cirne said in a release.
Francisco Partners and TPG had previously failed in acquiring New Relic after they could not get enough debt financing to meet New Relic’s valuation.
The private equity groups have now been able to get enough financing to meet New Relic’s valuation requirements, with major shareholders, including Cirne and activist hedge fund Jana Partners, signing off on the deal.
However, New Relic can still accept offers from other bidders for up to 45 days, in what was termed a “go-shop” period.
New Relic builds cloud-based software that allows websites and mobile apps to monitor servers and databases, and track user interactions.
The firm’s growth has declined amid stiff competition from other Application Performance Monitoring (APM) providers such as Dynatrace and Datadog.
TPG is an alternative asset manager with investments across the United States and Europe.
Francisco Partners which has taken other cloud and IT companies private, including in a $17 billion deal for Sumo Logic and a 2018 deal for payment technology company Verifone, is a technology-focused private equity firm with past investments in Barracuda Networks, On Semiconductor, and K2.
