(Reuters) – Enterprise software company Informatica Corp (INFA.O) has received offers from two private equity consortia and is negotiating a sale that could value it at between US$5 billion and US$6 billion, according to people familiar with the matter.
A deal would be this year’s largest leveraged buyout. Private equity firms have been reluctant to take big companies private for fear of overpaying, and the negotiations with Informatica may not lead to a deal, the people cautioned.
Permira Advisers Ltd in a consortium with Canada Pension Plan Investment Board (CPPIB), and Thoma Bravo LLC, in partnership with Ontario Teachers’ Pension Plan (OTPP), submitted bids for Informatica last week, according to the people. They have been asked to improve on their offers and the negotiations are ongoing, the people added.
A third consortium, comprising Silver Lake Partners LP and Hellman & Friedman LLC, did not submit a financed offer but has indicated it is open to continuing talks with Informatica if its valuation expectations are lowered, some of the people said.
The exact value of the offers made could not be learned. The sources asked not to be identified because the talks are confidential. Informatica, Thoma Bravo, OTPP, CPPIB and Silver Lake declined to comment. Permira and Hellman & Friedman did not respond to requests for comment.
So far this year the biggest leveraged buyout has been the agreed acquisition of gym operator Life Time Fitness Inc by buyout firms Leonard Green & Partners LP and TPG Capital LP for more than US$4 billion, including debt.
Redwood City, California-based Informatica helps companies connect software and enterprise applications and store data. It competes in the integration software market with Tibco, a company that went private in December in a US$4.3 billion sale to buyout firm Vista Equity Partners.
Vista’s deal gave Tibco an enterprise value of more than 18 times the company’s 12-month earnings before interest, depreciation and amortization (EBITDA). Informatica currently has an enterprise value of 15.5 times its projected EBITDA over the next 12 months, according to Thomson Reuters data.
In 2014, Informatica’s total revenues rose 10.5 percent year-on-year to US$1.05 billion, while its pre-tax income jumped 21 percent to US$170.3 million.
Despite such performance, activist hedge fund Elliott Management Corp disclosed an 8 percent stake in Informatica in January and said in a regulatory filing it was speaking to the company about ways to maximize shareholder value.
(Reporting by Greg Roumeliotis and Liana B. Baker in New York; editing by Andrew Hay)
(This story has been edited by Kirk Falconer, editor of peHUB Canada)
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