Adding to a string of bets on companies that provide software and information technology systems to corporations, global investment firm KKR & Co. LP (KKR, Financial) announced on Tuesday it is acquiring BMC Software.
While the specific terms of the deal were not disclosed, the New York Post reported last week the Houston-based company could be worth approximately $10 billion.
BMC provides software that helps companies organize tech support functions. The company was taken private in 2013 by a group of investors, which include Bain Capital and Golden Gate Capital, after facing pressure from activist hedge fund Elliott Management.
Since going private, BMC has focused on innovation and go-to-market initiatives in an effort to address the shift toward cloud-computing, cybersecurity and data analytics. In a statement, Peter Leav, president and CEO of BMC, said the company’s growth outlook is strong and is “competitively advantaged” to continue to “invest and win” in the marketplace.
“Our customers can expect the BMC team to remain focused on providing innovative solutions and services with our expanding ecosystem of partners to help them succeed across changing enterprise environments,” he said. “We are excited to embark on our next chapter with KKR as our partner."
Herald Chen, KKR member and head of its Technology, Media and Telecom industry team, emphasized the need for companies to adapt to changes in order to better serve customers.
"In an ever-changing IT environment that is only becoming more complex, companies that help simplify and manage this essential infrastructure for their enterprise customers play an increasingly important role," he said.
KKR said it has invested roughly $26 billion in technology companies over the past decade. Some of its other investments include Mitchell, Epicor and Calabrio, which all produce software used by businesses.
The market did not embrace the news. KKR’s stock fell nearly 3% following the announcement to $21.86. It closed at $22.48 on Friday.
GuruFocus estimates the stock has gained 2% year to date, however.
The deal is expected to close in the third quarter.
Disclosure: No positions.
