The IT infrastructure-monitoring software company
New Relic
said it has agreed to be acquired by the private-equity firms Francisco Partners and TPG for $87 a share in cash, or about $6.5 billion.
New Relic (ticker: NEWR) has been in play for more than a year now. In July 2022, Reuters had reported that the company was in talks to hire financial advisors to consider a sale. A few months ago, the news service said that Francisco and TPG had ended talks to acquire New Relic after they failed to secure enough debt financing.
Now, the situation appears to have changed. Hope Cochran, the company’s lead independent director, said in a statement that the deal follows “a comprehensive process” that included talks with both financial and strategic potential buyers.
Founder Lew Cirne—New Relic is an anagram of his name—will roll over his 40% stake in the company as part of the new ownership group.
The company said the deal should close later this year or early in 2024, subject to various regulatory requirements. New Relic said the deal isn’t subject to a financing condition, no small matter given the buyers’ reported difficulty in financing the transaction earlier in the year.
The agreement includes a 45-day “go-shop” period that gives New Relic the right to consider other proposals, should any emerge. But Needham analyst Mike Cikos said in a research note that the $87 deal price “seem fair,” and that a higher bid from another party seems unlikely.
New Relic provides so-called observability software, which monitors activity and performance of corporate IT networks. The deal announcement is giving a boost to shares of the company’s rivals, including
Datadog
(DDOG), up 3.6%; Dynatrace (DT), up 2%; Splunk (SPLK), up 4.4%; and Elastic (ESTC), up 3%.
New Relic shares were 13% higher to $83.89.
Write to Eric J. Savitz at [email protected]
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