Vista Equity Set To Acquire Tibco Software Inc. For $4.3 Billion

Tibco Software Inc. (NASDAQ:TIBX) announced on Monday, September 29th that it has agreed to be bought by private equity firm Vista Equity Partners in a deal valued at $4.3 billion, marking the largest buyout in the technology industry this year.

Tibco software

The deal was unanimously approved by Tibco’s board of directors, though it still requires approval from Tibco shareholders.

Tibco – Vista Equity deal at $24 per share

In a statement unveiled today, Tibco Software Inc. (NASDAQ:TIBX) announced that it has entered into a definitive agreement to be acquired by the leading private equity firm, Vista Equity Partners. The agreement involves assumption of net debt.

The terms of the deal envisages Vista to acquire all outstanding Tibco common stock for $24 per share in cash representing a 26.3% premium to the closing price of Tibco common stock on September 23, 2014, one day prior to public reports that multiple parties were competing to acquire the business software maker.

The enterprise value of the transaction represents over 18 times Tibco’s EBITDA for the 12-months ending August 31, 2014. The deal is expected to close in the fourth calendar quarter of 2014.

Declining profit

In the most recent quarter, the enterprise software company’s profit dropped to $1.5 million from over $8.8 million in the period a year earlier. Reflecting the poor performance, its stock has fallen 23% over the last 12 months.

As reported earlier, Praesidium Investment Management, which owns 3.2% of Tibco Software Inc. (NASDAQ:TIBX)’s outstanding shares, said the company is currently falling far short of its significant potential, resulting in a material disconnect between the high strategic value of Tibco’s technology and the price of Tibco’s stock in the public market. Praesidium indicated that there is substantial opportunity to unlock value at Tibco.

Exuding confidence over the latest deal, Tibco Software Inc. (NASDAQ:TIBX) chairman and chief executive Vivek Ranadive said that the deal to go private would provide the company more flexibility to execute its long-term plan. He has sought to enhance the company’s revenue by focusing on subscription pricing and generating a base of recurring revenue.

Vista Equity specializes in buying and investing in software, data and technology companies. The firm took cybersecurity-software maker Websense Inc (NASDAQ:WBSN) private last year for $1 billion.

Despite its relative obscurity, Vista Equity Partners, led by Robert F. Smith, has over $13 billion in assets under management, and has generated some of the best returns of any private equity firm in recent years.

About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports