Tibco Goes Private After £2.6bn Buyout

Management at Tibco Software have agreed to sell the company to a private equity firm, as it becomes the latest enterprise software firm to withdraw from the public market and go private.

The move comes after reports that the firm’s board of directors had come under pressure from activist investors Praesidium Investment Management Co LLC and Starboard Value LP.

Strategic Review

Tibco specialises in infrastructure and business intelligence software, and since early September, had been undergoing a “review of a variety of strategic and financial alternatives available to the company.”

In its latest quarterly earnings, the Palo Alto, California-based company had revealed both declining profits and revenues. For the third quarter ending 31 August, it posted net income of $2.6m (£1.6m), compared to $21.3m (£13m) in the same year-ago quarter. Likewise, revenue slipped to $255.6m (£157m), down from $270.9m (£166.5m) a year earlier.

Following the strategic review, the board decided the best decision for the company going forward was to opt for privatisation and be acquired by Vista Equity Partners, a private equity firm that focuses on software, data and technology-enabled businesses.

Under the terms of the agreement, Tibco stockholders will receive $24.00 (£14.75) per share in cash, a 26 percent premium on the stock’s closing price on 23 September. This means that Vista Equity Partners is paying a total of $4.3bn (£2.6bn), including the assumption of net debt, for the company.

“The sale of Tibco to Vista will provide our shareholders with immediate and substantial cash value, as well as a compelling premium, and the Board has unanimously agreed that this transaction is in the best interests of all our stakeholders,” said Vivek Ranadivé, Chairman and CEO of Tibco in a statement.

“As a private company, Tibco will have added flexibility to serve our customers and execute on our long-term strategy,” said Ranadivé. “We are excited to work with our new partners at Vista and enter our next chapter of growth and industry leadership.”

There is no word on whether Ranadivé will remain in charge of the company once the deal has closed.

Privatisation Trend?

The decision by Tibco to opt out of the harsh light of public scrutiny that comes from being a publicly listed entity on the stock markets is not unique. The most famous tech company in recent years to follow that route has to be Dell, which had also fought a bitter internal battle with activist investors, most notably Carl Icahn.

But there are other examples as well.

Earlier this month Compuware agreed to sell itself to the private equity firm Thoma Bravo for about $2.5bn (£1.5bn) after years under pressure from the activist hedge fund Elliott Management.

In May 2013 BMC Software agreed to be taken private in a $6.9bn (£4.2bn) deal by Bain Capital LLC and Golden Gate Capital. BMC had explored a possible sale in 2012 following pressure from activist investor Elliott Management, its second-largest shareholder.

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