SolarWinds Inc., a maker of software for managing computer networks, agreed to be bought by private-equity firms Silver Lake Partners and Thoma Bravo in a deal valued at $4.5 billion.
The firms said Wednesday they will pay SolarWinds stockholders $60.10 a share, or about 44 percent more than the company’s closing price on Oct. 8, before news emerged that it was in talks to be taken private.
Shares of SolarWinds rose 16 percent to $58.31 at the close in New York, their biggest one-day jump since July 2012.
“This is a ‘Murphy-like home run scenario’ for SolarWinds’ investors that have stuck with this company through its rollercoaster ride, especially over the past year as SolarWinds has run into some execution speed bumps,” Dan Ives, an analyst at FBR Capital Markets, wrote in a note. “We see no other strategic buyers for SolarWinds as a financial buyer clearly represented the most logical path.”
Funding for the deal may include $1.4 billion to $1.5 billion of loans and $600 million to $700 million of bonds, said a person with knowledge of the financing, who asked not to be identified because the details aren’t public.
Private-equity interest in tech companies is high. Dell Inc. is buying EMC Corp. for about $67 billion, helped by firms including Silver Lake. Vista Equity Partners said recently that it’s acquiring Solera Holdings Inc., which sells risk-management software to investors, for $6.5 billion including net debt. Peer CDK Global Inc., spun off from Automatic Data Processing Inc. last year, is exploring a sale and accepting expressions of interest from private-equity firms after drawing unsolicited interest, people familiar with the situation have said.
Gains in its subscription cloud products have not offset slowing sales growth in license revenue, Mandeep Singh, a Bloomberg Intelligence analyst, said in a July report. SolarWinds has also faced pressure from increasing competition, he said.
The company, which went public in 2009, produces a range of IT software for businesses including database management and security and compliance, according to its website. SolarWinds is being advised by JPMorgan Chase & Co.