SUMMARY
- Francisco Partners and TPG form a consortium to take the software company, New Relic private in a landmark deal worth $6.5 billion.
- The deal's completion, expected by early 2024, will mark New Relic's return to private ownership after nearly a decade on the New York Stock Exchange.
- Major shareholders, including the company's founder, Lew Cirne, have approved the all-cash deal, reflecting a 26% premium over New Relic's recent average closing price.
In an announcement made earlier this week, a joint venture of Francisco Partners and the private equity giant, TPG, is set to acquire New Relic, a prominent software provider, in a deal worth nearly $6.5 billion. The consortium has offered an all-cash deal amounting to $87 per share, taking the company private.
Prior to the announcement, New Relic's shares experienced a hike of 14%, exceeding $84 in the pre-market trading stage. This offer indicates a 26% premium over New Relic's volume-weighted average closing price from the previous month. With its portfolio of products and services designed to help track the performance of websites and applications, New Relic has carved a niche for itself in the software sector.
The software giant plans to wrap up the deal by early 2024, which will witness its transition back into a privately-owned entity, almost nine years post its public debut on the New York Stock Exchange in 2014.
Expressing his satisfaction with the partnership, Lew Cirne, the Founder and Executive Chairman of New Relic stated, "Our collaboration with Francisco Partners and TPG is something we eagerly look forward to. Their commitment to leverage and enhance New Relic's strong foundation and potential resonates with our vision."
Although talks between the two entities had fizzled out in May due to financing issues as reported by Reuters, the deal has now resurfaced alongside New Relic's earnings report. Despite initial hiccups, both private equity firms managed to secure adequate financing to match New Relic's valuation. The deal also received green lights from major shareholders, including Lew Cirne and Jana Partners, a known activist hedge fund.
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