BMC Software Sued by Investor Over $6.9 Billion Bain Deal

BMC Software Inc. (BMC), a Houston-based software maker that abandoned a sale last year after failing to find a buyer, was sued by an investor over its plans to be taken private.

The company’s proposed $6.9 billion sale to Bain Capital LLC and and Golden Gate Capital is inadequate and detrimental to shareholders, lawyers for investor Nicole Henzel said in the complaint filed yesterday in Delaware Chancery Court. Henzel is seeking to represent all BMC shareholders in her bid to bar the transaction.

BMC agreed to be taken private after struggling to compete with rivals in the market for server software for cloud computing. The company, which provides software that keeps corporate computer networks running smoothly, gets about 40 percent of its sales from managing mainframe computers from International Business Machines Corp.

The buyout group, which includes Singapore’s GIC Special Investments Pte Ltd. and Insight Venture Partners, will pay $46.25 a share in cash for BMC.

BMC has been trading well below its intrinsic value for more than two years due in large part to management’s failure to capitalize on cloud computing, Henzel said. Still, the company’s financial performance has been improving with rising revenue and bookings, Henzel said. The proposed buyout caps that improvement, she said in the complaint.

“The merger agreement ensures that instead of the benefits of this improved financial outlook accruing to BMC’s long-suffering shareholders, the buyout group will reap a windfall,” Henzel said in the complaint.

Mark Stouse, a BMC spokesman, declined to comment on the lawsuit in an e-mailed message.

BMC rose 2 cents to $45.37 at in Nasdaq Stock Market trading.

The case is Nicole Henzel v. BMC Software Inc., CA8542, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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