Permira, CPPIB to Buy Informatica in Biggest LBO of the Year

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Private equity firm Permira and the Canada Pension Plan Investment Board agreed to buy Informatica Corp. in a $5.3 billion transaction, the largest leveraged buyout this year.

Informatica stockholders will receive $48.75 a share in cash, according to a statement Tuesday. That’s 6.4 percent higher than the closing price of $45.83 on Monday. The stock gained 20 percent this year through April 6.

The software company, based in Redwood City, California, was a target of activist investor Elliott Management, which amassed a stake and pushed for a sale, a person familiar with the matter said in January. Elliott, run by Paul Singer, has successfully pushed for deals at other technology companies, including Riverbed Technology Inc. and BMC Software Inc.

Sohaib Abbasi, Informatica’s chief executive officer, “and his board have delivered truly outstanding value to shareholders” with Tuesday’s announcement, Jesse Cohn, Elliott’s head of U.S. equity activism, said in an e-mail.

The deal will help boost the volume of leveraged buyouts this year, which slipped in the first quarter. LBOs totaled $37.1 billion in the first three months of the year, a 3.4 percent decline from a year earlier and down 32 percent from the fourth quarter, according to data compiled by Bloomberg.

Enterprise Software

Life Time Fitness Inc. last month agreed to be bought by private equity firms Leonard Green & Partners and TPG Capital in a $4 billion transaction, the second-biggest LBO agreed to this year after Informatica. Bain Capital last month said it will buy Blue Coat Systems Inc. for $2.4 billion, the third-biggest LBO of the year.

Informatica makes tools to help companies link together and manage large amounts of data. Like other traditional enterprise technology companies, it has been forced to change its products to respond to businesses storing more data in computers operated by third parties, such as Inc., and purchasing software via subscriptions rather than upfront license fees.

Private equity firms and other strategic buyers have embraced enterprise software, attracted by strong recurring revenue once businesses install the technologies that connect new products to existing systems.

“We are very excited about the company’s ongoing transition to cloud- and subscription-based services, as well as its continued pursuit of four separate billion-dollar market opportunities in cloud integration, master data management, data integration for next-generation analytics, and data security,” Brian Ruder, a partner at Permira, said in the statement.

Permira Deals

London-based Permira, which traces its origins back to investment bank Schroders Plc, has a background in investing in technology, media and telecommunications companies, with more than a third of its deals since 1997 targeting technology-related assets. The firm has owned stakes in companies including television producer All3Media Ltd., satellite group Intelsat SA, family-history website Inc. and educational-software provider Renaissance Learning Inc.

Permira and CPPIB expect the acquisition of Informatica to be completed by third quarter, according to the statement.

“Informatica’s differentiated suite of software solutions, stable base of recurring revenues and strong potential for future growth make this a highly attractive investment,” said Mark Jenkins, CPPIB’s global head of private investments.

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