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Tibco Taken Private by Vista Equity for $4.3 Billion

tibcoVista Equity Partners has agreed to purchase Tibco Software (TIBX), an infrastructure and business software company, for $4.3 billion in cash, equivalent to $24 per share. On August 16, David West who is part of a special committee formed by Tibco, stated the company was currently involved with a diverse group of financial and strategic buyers.

A Vista representative stated the target timeframe for the deal to close with Vista Equity was in this year’s fourth quarter. When pressed for more information, both Tibco and Vista declined. However, the companies did say that the deal represents a 26% premium on Tibco’s shares, as well as 18 times Ebitda.

Reportedly, Jefferies Finance LLC and JPMorgan Securities LLC have committed to debt finance the Tibco buyout. In addition, financial advice is being offered by a team from Bank of America Merrill Lynch, along with Union Square Advisors LLC and for legal counsel to Vista, experts from Kirkland & Ellis LLP are onboard.

As far as the auction of Tibco, previous reports indicated several bids had been made on the company with possible suitors to include Oracle (ORCL), IBM (IBM), and SAP (SAP). However, another possibility was a breakup of the company.

Tibco purchased Spotfire in 2007 for $195 million and from 2010 to 2013, had a double-digit growth in sales. Tibco was hopeful that Spotfire would boost growth but in recent quarters, the business faltered. To provide a strategic review of this struggling data analytics software, California-based Tibco hired Goldman Sachs & Co, along with Wilson Sonsini Goodrich & Rosati PC earlier this month.

Vivek Ranadive, CEO and Chairman of Tibco blamed the marketing approach specific to Spotfire as being the problem. He denied his 2013 purchase of the Sacramento Kings national basketball franchise was a distraction from focusing on the business.

This year, Tibco shares were down roughly 13% and noted by market watchers, the company underperformed. The most recent quarter experienced a $1.5 million decline in profit, down from $8.8 million recorded last year in the same quarter. In June, activist shareholder Praesidium Investment Management Co. LLC took stake in Tibco.

In the meantime, a number of sources confirmed a fundraising process was being finalized. Initially, close to $4 billion was raised but insiders expect long-term, the figure will go up to $5 billion. As a result, total assets under management will exceed the $13 billion target.

The buyout of Tibco comes at a time when significant capital for new tech-focused funds has been raised, while at the same time, it is common for these funds to struggle when trying to take on public market auctions.

For example, a recent deal involving the bid for Concur Technologies (CNQR) by several private equity firms saw offers quickly being topped financially or for strategic purposes by SAP (FRA: DE:SAP), a German business software firm.

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