BMC Software, Inc. (NASDAQ:BMC) today, just a day before its Q1 earnings release, announced that it was selling itself to a consortium of private equity firms led by Bain Capital and Golden Gate for $6.9 billion, Reuters reports.
This comes after more than a year of tugging between BMC and its activist stakeholder Elliott Management. Paul Singer’s Elliott Management Corp is the largest stakeholder in BMC Software, Inc. (NASDAQ:BMC) with ownership in 9.6 percent of BMC’s common stock.
Just a few days ago Reuters reported that the a group of firms including Bain Capital, Golden Gate Capital, GIC Special Investment and Insight Venture Partners had tabled a $6.5 billion bid for BMC which outshone a previous offer that was put up by a group of firms led by KKR & Co. L.P. (NYSE:KKR).
The $6.9 billion deal means a payment of $46.25/share and offers a 14 percent premium to Elliott, according to the estimated price of the hedge fund’s stake acquired in May 2012. However the deal gives only a 2 percent premium on the current share price of BMC Software, Inc. (NASDAQ:BMC), which closed at $45.42 on Friday.
Elliott’s portfolio manager Jesse Cohn said in statement, “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.”
Jesse Cohn was the frontrunner of Elliott’s activist campaign against BMC Software which demanded a shakeup of BMC’s board. In response to Elliott’s proxy fight, BMC added two members to its BoD that were nominated by the activist hedge fund.
The deal is expected to finalize towards the end of this year and so far includes a 30-day go-shop provision. This additional period comes after KKR & Co. L.P. (NYSE:KKR) and TPG had put up their bids.
BMC Software, Inc. (NASDAQ:BMC) was advised on the sale by Morgan Stanley (NYSE:MS), Bank of America Merrill Lynch while legal counsel was provided by the law firm, Wachtell, Lipton, Rosen & Katz.
BMC’s shares remain largely unmoved by the buyout news, stock has gained only 0.15 percent today.