BMC Bows To Shareholder Pressure And Agrees Sale

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BMC is to escape the pressures of being a publicly listed company by selling itself to private equity buyers

Business service management specialist BMC Software has ended its 25-year romance with Wall Street after it revealed it is to be acquired by a group of private equity companies.

The company said this week it had signed a definitive agreement to be acquired by a private investor group led by Bain Capital and Golden Gate Capital, together with GIC Special Investments Pte Ltd and Insight Venture Partners.

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Houston-based BMC said its acquisition was approved by a unanimous vote of its directors.

Under the terms of the agreement, the investor group will acquire all outstanding BMC common stock for $46.25 (£29.88) per share in cash, or approximately $6.9 billion (£4.4bn). This, said BMC, represents an attractive premium of its stock price, although that figure is less than two percent above last Friday’s closing stock price of $45.42 (£29.30).

“After a thorough review of strategic alternatives, the BMC board of directors is pleased to reach this agreement, which provides shareholders with immediate and substantial cash value, as well as a premium to our unaffected share price,” said Bob Beauchamp, chairman and chief executive officer at BMC.

“BMC believes the opportunity to become a private company will provide additional flexibility and position us to invest more strategically to drive powerful innovation and deliver cutting edge customer solutions.

“We look forward to working closely with all parties to complete this transaction and enter into our next chapter of growth and industry leadership.”

BMC recently revealed that for the year ending 31 March, it had achieved a net profit of $331 million (£214m), down 17.5 percent from the $401 million (£259m) net profit it posted in 2012. But sales rose 1.4 percent to $2.2bn (£1.42bn) compared to $2.17bn (£1.4bn) in 2012.

However, there was a worrying 4.5 percent decrease in licence revenues during the past fiscal year, which was balanced out by modest growth in maintenance and professional services space.

For a while now there have been rumours that BMC’s management was being pressured by its investment backers to sell the company.

Last October, it was reported that Elliott Management, which acquired a significant stake in BMC in 2012, had placed pressure on the software maker to sell itself, although BMC refused to comment on the report.

“Elliott applauds the BMC Software board and executive leadership for delivering this value-maximizing outcome for stockholders, which both contains a go-shop provision and reflects what we believe is a substantial premium to BMC’s unaffected stock price,” said Jesse Cohn, Elliot portfolio manager.

The buyout is not a done deal yet, as there is a 30-day period for any other interested parties to submit their own buyout proposals for BMC. 

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