KKR Deal to Buy Epicor From Apax Said Valued at $3.3 Billion

  • Apax took software provider private in 2011 leveraged buyout
  • Chen: Epicor has ‘growth prospects and an attractive price’

KKR & Co.’s agreement to acquire Epicor Software Corp. from Apax Partners is valued at $3.3 billion, according to people with knowledge of the matter, who asked not to be identified because the information is private.

The firms announced the deal earlier Tuesday in a statement, without disclosing terms. At that value, the transaction is KKR’s largest technology purchase in nine years.

KKR will use its North America XI fund for the acquisition, which is expected to be completed by next month, the New York-based asset manager said. Apax took the enterprise-software company private in a 2011 leveraged buyout and merged it with Activant Solutions Inc. in a $2 billion deal.

Including dividends taken by Apax in 2013 and 2015, the London-based buyout firm generated a return of more than four times its equity investment in Epicor, or a profit of more than three times its investment, one of the people said. Apax deployed money from two successive European funds and its U.S. fund in the deal.

Kristi Huller, a spokeswoman for KKR, and Todd Fogarty, a spokesman for Apax at Kekst & Co., declined to comment on the value of the transaction or Apax’s profit.

Tech LBOs

The LBO is the latest in a string of private equity deals for technology companies, specifically business-software providers. Information-technology companies have represented the biggest target by deal value in such takeovers since the start of 2015, according to research firm Preqin.

Deals in that period have included Carlyle Group LP’s $7.4 billion purchase of Symantec Corp.’s Veritas data-storage business, the $5.3 billion LBO of Informatica Corp. by Permira and the Canada Pension Plan Investment Board, and Thoma Bravo’s $3 billion acquisition of Qlik Technologies Inc. announced last month.

“We’ve been looking for a long time at the larger, more established software assets,” Herald Chen, KKR’s co-head of technology deals, said Tuesday by phone. “We were looking for the right one with both growth prospects and an attractive price.”

Among those prospects is further bolstering the company’s cloud, or internet-based, products, said Chen. Epicor accelerated its cloud offerings under Chief Executive Officer Joe Cowan, whom Apax brought into the role in 2013.

Epicor, based in Austin, Texas, generated $285 million in adjusted earnings before interest, taxes, deprecation and amortization in the year ended March 2015, according to its most recent 10-Q regulatory filing. Apax will continue to hold Aptos Inc., a software provider to retailers that Epicor spun off in June 2015.

KKR, led by co-CEOs Henry Kravis and George Roberts, managed $126.4 billion in private equity holdings, credit assets, real estate and hedge funds as of March 31. The firm’s latest private equity fund, its 12th, will probably get $12 billion from investors and reach as much as $13 billion with money from KKR and employees, executive Scott Nuttall said in April.

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