Bain leads $6.9bn software take-private

The acquisition of BMC Software by a group of investors including Golden Gate Capital, Insight Venture Partners and the Government of Singapore Investment Corporation is the third private equity ‘mega-deal’ to transact in 2013.

Bain Capital will lead an investor group consisting of Golden Gate Capital, Insight Venture Partners and GIC Special Investments, the private equity arm of the Government of Singapore Investment Corporation, to acquire listed software maker BMC Software for about $6.9 billion.

The investor group’s offer of $46.25 per share, representing roughly a 2 percent premium over Friday's closing price, reportedly beat out a rival bid from Kohlberg Kravis Roberts, TPG Capital and Thoma Bravo. BMC may solicit additional offers for a period of 30 calendar days, according to a statement.

BMC bills itself as an IT services and cloud computing company with more than 20,000 IT organisations as customers. The company generated total revenues of $2.2 billion in fiscal 2012 and net earnings of $562 million.

“BMC is the only enterprise software vendor that can go from mainframe to mobile, with solutions that help IT drive real business innovation and optimise operations management and employee productivity,” said Ian Loring, managing director at Bain Capital, in the statement.

Hedge fund Elliott Management will sell its 9.6 percent of BMC common stock in the transaction, which is expected to close before the end of the year.

Bain will invest entirely from its $10.7 billion Fund X, a 2007 vintage. Golden Gate will invest from its Golden Gate Capital Opportunity Fund, which collected $3.5 billion in 2011.

Bain Capital and Golden Gate capital declined to comment. Insight Venture Partners was not immediately available for comment.

Credit Suisse, RBC Capital Markets and Barclays will provide debt financing in connection with the deal. The transaction is the largest ever take-private for Golden Gate Capital, which has invested in or acquired more than 65 software companies.

The take-private of BMC follows two other multi-billion dollar private equity transactions in February that have stirred debate over a possible return to the boom era days prior to the global financial crisis of 2008. First came confirmation of the $24.4 billion take-private of PC manufacturer Dell, backed by Silver Lake; then Warren Buffett’s Berkshire Hathaway partnered with Brazilian investment firm 3G Capital to buy Heinz for $28 billion.