Reuters – Private equity firms Hellman & Friedman LLC and JMI Equity are exploring a sale of human resources management software firm Kronos Inc, which could be valued at more than $4 billion, people familiar with the matter said on Wednesday.
Kronos is in early-stage talks with a small group of private equity firms, including KKR & Co LP, TPG Capital LP and Bain Capital LLC, about a potential deal, the people said. Oracle Corp and SAP AG would be natural buyers for Kronos but have so far shown little interest, the people added.
Hellman and Friedman is working with Morgan Stanley on the sale of Kronos, which has annual earnings before interest, tax, depreciation and amortization (EBITDA) of around $350 million, two of the people said.
The sources asked not to be identified because the sale process is confidential.
Hellman & Friedman, Morgan Stanley, KKR, TPG and Bain declined to comment while representatives of Kronos, JMI Equity, Oracle and SAP did not immediately respond to requests for comment.
Chelmsford, Massachusetts-based Kronos provides workforce management solutions to companies and organizations in more than 100 countries. Hellman & Friedman, together with smaller private equity firm JMI Equity, took Kronos private in 2007 for $1.8 billion.
The two private equity firms also teamed up last month to buy insurance software provider Applied Systems from Bain for $1.8 billion. In 2010, they sold another insurance softwarefirm, Vertafore, to TPG for $1.4 billion.
Hellman & Friedman and JMI have taken advantage of Kronos’ strong cash flow to draw more than $1.5 billion in dividends from the company, and so have already earned twice the $752.9 million they committed as equity when they agreed to acquire the company in 2007.
Most recently, they had the company borrow last month to pay themselves a $490 million dividend, according to Moody’s Investors Service Inc.
Kronos has a large and diversified base of enterprise clients and its recurring maintenance and subscription model has contributed to sustained growth in its revenue and EBITDA, Moody’s commented last month.
(Additional reporting by Soyoung Kim in New York; Editing by Jeremy Laurence)