Bain Capital to make at least 3x its money with Blue Coat sale

Bain Capital stands to at least triple its money with the sale of Blue Coat Inc.

Symantec said on June 12 that it agreed to buy Blue Coat in a deal valued at $4.65 billion. The deal calls for Bain Capital, the seller, to invest $750 million in convertible notes. Silver Lake also agreed to provide $500 million in convertible notes, doubling its investment in Symantec to $1 billion. Blue Coat management is also investing $200 million of equity in the deal, a spokeswoman confirmed.

Blue Coat, the Sunnyvale, California, network-security firm, employed 1,924 people as of April, a regulatory filing said.

Symantec has had Blue Coat on its radar for more than a year, executives on a call said Monday.

Bain acquired Blue Coat in May 2015 in a deal valued at $2.5 billion, the regulatory filing said. Bain funded the deal with $900 million of cash and $1.62 billion in debt, the S-1 said.

Blue Coat, under Bain’s ownership, did two acquisitions, Elastica and Perspecsys Inc. The private equity firm is not believed to have provided further equity for the deals. Blue Coat paid out $155.2 million in dividends in 2014, before Bain acquired the company, the S-1 filing said.

With the $4.65 billion sale to Symantec, Bain is making at least three times its investment.

Blue Coat Chief Executive Greg Clark will take over as chief at Symantec. Michael Brown, Symantec’s previous CEO, left in April after the company reported disappointing quarterly results, Reuters reported.

“This is a great deal,” said Jason Panzer, partner and chief operating officer of Marlin & Associates. “It’s a good acquisition for Symantec and a great return for Bain.”

The deal also means Blue Coat will not go public. The company filed to go public earlier this year.

For the year ended April 30, Blue Coat posted a net loss of $289 million on revenue of $313.8 million, the S-1 filing said.

Bain used its 11th buyout fund, which closed at $7.3 billion in 2014, to invest in Blue Coat. Performance data for Fund XI was not available.

A Bain Capital spokesman declined comment. Blue Coat couldn’t be reached for comment.

Action Item: To contact Symantec: jonathan_doros@symantec.com

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