Thoma Bravo LLC, one of the two private-equity firms that spun out of Chicago-based buyout pioneer Golder Thoma & Co., agreed to buy Deltek Inc. in an all-cash deal valued at $1.1 billion.
Shareholders of Deltek, a provider of computer software for government contractors, will receive $13 a share, the companies said today in a statement. That’s 7.2 percent less than Herndon, Virginia-based Deltek’s closing price on Aug. 24 and 24 percent more than the price on June 11, the day before the company shared information on the sales process to potential buyers on a confidential basis.
Thoma Bravo, which specializes in investing in software, education and financial-services companies, plans to expand Deltek through a combination of acquisitions and internal growth. In the past five years, the private-equity firm has bought 14 software companies and has expanded them through 29 “add-on” acquisitions, according to Thoma Bravo’s website. This year, it has invested in Telestream Inc., which makes software for on-demand video viewing, and Blue Coat Systems Inc., the Internet-security software maker.
“Thoma Bravo is excited to work with Deltek’s leadership team to accelerate growth of the company through the firm’s proven buy and build strategy,” Holden Spaht, a partner at the firm, said today in the statement.
Deltek fell $1.08, or 7.7 percent, to close at $12.93 in New York. The stock has gained 32 percent this year, compared with the 12 percent gain in the Standard & Poor’s 500 Index.
Thoma Bravo’s offer is 14.6 times Deltek’s earnings before interest, taxes, depreciation and amortization over the past 12 months as of June 30, Deltek said. The median Ebitda multiple of 85 acquisitions of application-software in the past five years was about 11, according to data compiled by Bloomberg.
New Mountain Capital LLC, Deltek’s largest shareholder, agreed to the transaction, which will close in the fourth quarter, according to the statement. The New York-based private-equity firm acquired a majority of Deltek in 2005 and took the company public in November 2007. Deltek’s services are used by 15,000 organizations and 2 million users in more than 80 countries.
Secondary sales, where private-equity managers exit an investment by selling to another buyout firm, are the second-most common method of exiting deals, after sales to strategic buyers. The method accounted for seven buyout transactions worth more than $1 billion during the second quarter, according to London-based researcher Preqin Ltd.
Deltek posted net income of $4.24 million in the second quarter compared with a loss of $3 million a year earlier, according to a statement last month. Revenue fell 2.2 percent to $86 million.
Thoma Bravo, which manages funds with almost $4 billion of commitments from offices in Chicago and San Francisco, will make the investment out of its flagship Thoma Bravo Fund X pool, which closed in February with $1.25 billion in commitments.
Greenhill & Co. provided financial advice, helped by Credit Suisse Group AG, while Fried Frank Harris Shriver & Jacobson LLP served as legal counsel to Deltek. Jefferies Group Inc. was Thoma Bravo’s financial adviser and Kirkland & Ellis LLP served as legal counsel.
Golder Thoma & Co., which was started by Stanley Golder and Carl Thoma in 1980, split into two firms in 1998. GTCR, the other firm, has invested more than $9 billion in more than 200 companies, according to its website.