(Reuters) – SunGard Data Systems Inc is in talks with buyout firm Apax Partners LLP to sell its data management unit, which it has been hoping to divest for as much as $2 billion, several people familiar with the matter said.
The computer software maker has struggled to find a buyer for the division in the past several months, and a deal with Apax is far from certain, the people said this week. They requested anonymity because the negotiations are confidential.
The price Apax was willing to pay for the unit, which helps clients safeguard their data, could not be learned.
SunGard was acquired for $11.4 billion in 2005 by private equity groups Silver Lake, Bain Capital LLC, Blackstone Group LP (BX.N), Goldman Sachs Capital Partners LP (GS.N), KKR & Co LP (KKR.N), Providence Equity Partners Inc and TPG Capital LP.
Representatives of Apax, SunGard and its private equity owners either declined to comment or did not respond to requests for comment.
SunGard’s effort to shed the business comes amid challenges in competing with rivals such as International Business Machines Corp (IBM.N).
One of the largest leveraged buyouts that preceded the 2008 financial crisis, SunGard is a private equity investment that had not increased in value since the buyout firms took it private in 2005, two people familiar with the matter previously told Reuters.
The unit for sale, which is called “managed services” and is part of what SunGard calls its “availability services” business, has helped customers recover data after major disasters such as Hurricane Sandy in 2012, Hurricane Katrina in 2005 and the attacks of September 11, 2001.
Availability services accounted for a third of SunGard’s 2012 revenue of $4.26 billion and “adjusted” earnings before interest, tax, depreciation and amortization of $1.25 billion.
Moody’s Investors Service Inc said in February that SunGard’s availability services business “has not executed effectively in a recovery/business continuity industry that is otherwise showing growth.”
The company’s other main business is “financial systems,” which provides software and technology applications to financial services professionals. It accounted for 62 percent of the revenue and 60 percent of EBITDA in 2012.
Despite a torrent of private equity-backed initial public offerings that have capitalized on the strong stock market this year, SunGard has held back on seeking a flotation. Moody’s has said the company would have to show sustained revenue growth in its core financial systems business and stabilize the availability services business before any IPO.
SunGard’s performance has been mixed this year. Revenue fell 4 percent to $2 billion in the first half from a year earlier. Operating income rose 6 percent to $167 million, benefiting from a 4 percent decline in expenses. Adjusted EBITDA declined 1 percent to $534 million.
The seven private equity owners carried out a dividend recapitalization of the company last year, paying themselves $720 million by borrowing the money.
Nevertheless, the company managed to cut its total debt by $1.2 billion, to $6.7 billion, at the end of 2012 from a year earlier. Debt stood at $6.5 billion at the end of June.