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September 29, 2014

Fast Data Specialist Tibco Goes Private

Fast data specialist Tibco Software said Sept. 29 it is being acquired by Vista Equity Partners for about $4.3 billion. The deal is reportedly the largest such tech buyout this year.

Under terms of the acquisition, Palo Alto-based Tibco said Vista Equity Partners would acquire all outstanding Tibco common stock for $24 per share in cash. Vista also will assume the enterprise software firm’s net debt.

The purchase price represents a 26.3 percent premium to the closing price of Tibco common stock on Sept. 23, one day prior to public reports that multiple parties were competing to acquire Tibco. The total value of the transaction represents more than 18 times the software company’s earnings for the last 12 months ending August 31, 2014, company managers noted.

Tibco’s quarterly profits have slipped recently, driving its stock price down by more than 20 percent over the last year. Tibco CEO Vivek Ranadive said in a statement the “transaction is in the best interests of all our shareholders.” The company’s board of directors agreed, unanimously.

“As a private company, Tibco will have added flexibility to serve our customers and execute on our long-term strategy,” added Ranadive, who also served as board chairman.

Vista Equity Partners claims $13.5 billion in capital investments, mostly focused on software, data and technology companies. The San Francisco-based private equity firm said it has taken five public companies private over the last three years.

Chairman and CEO Robert Smith indicated that Vista would retain Tibco’s management team in order to retain its “complete fast data platform.” The business intelligence specialist said its platform is designed to provide “the ability to capture the right information at the right time and act on it preemptively for a competitive advantage.”

Under pressure from activist shareholders to sell the company, a review committee considered several options, including selling itself. Board member David West said the company considered proposals from “a large and diverse group of strategic and financial buyers” before accepting Vista’s offer.

Tibco’s “event-enabled” platform is designed to respond to real-time events in order to speed business intelligence used to gain a first-mover advantage over competitors while reducing marketplace risks in ever shortening time spans. Hence, the company’s marketing campaign has stressed “the power of now.”

The platform also seeks to automate data and business processes to allow the company’s event processing technique to deliver business insights.

Despite being one of the largest players in the BI sector, Tibco has stressed processing data on the fly rather than developing a traditional database approach. Tibco has been betting on its in-memory technology called ActiveSpaces.

Nevertheless, company revenues have declined sharply over the last several quarters as the business intelligence market grows more crowded. The deal with Vista may signal that industry consolidation has begun.

The transaction must still be approved by Tibco shareholders and is subject to regulatory approvals and closing conditions. Vista said it expected to deal to close by the end of 2014. Goldman Sachs & Co. served as the financial advisor on the Tibco acquisition.

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